What is my annual ISA allowance?
Here’s everything you need to know about your annual ISA allowance.
What is your annual ISA allowance?
Every tax year, UK residents aged 18 or over get an allowance of £20,000 to save or invest into different individual savings accounts (ISAs). These can be a Cash ISA, a Stocks & Shares ISA, or a Lifetime ISA – and your £20,000 can be spread between these different accounts.
There’s also a Junior ISA, but that allowance is separate to your individual allowance of £9,000 because the account is held in your child’s name.
Here’s a breakdown of the different allowances you get for different types of ISA
- Cash ISA and Stocks & Shares ISA: £20,000 each tax year. This is shared between them – you can put £10,000 into a Cash ISA and £10,000 into a Stocks & Shares ISA, for example.
- Lifetime ISA: £4,000 each tax year. This is part of your overall £20,000 ISA allowance. So if you put the maximum £4,000 into a Lifetime ISA, you’ll have £16,000 of your £20,000 ISA allowance remaining. You could put £10,000 of that into a Cash ISA, and £6,000 into a Stocks & Shares ISA, for example.
- Junior ISA: £9,000 each tax year. This £9,000 is in your child’s name, and does not come out of your personal £20,000 annual ISA allowance.
There’s nothing stopping you from opening and paying into multiple ISAs at once – you can have a Cash ISA and a Stocks & Shares ISA for example. Plus, if you’ve opened a Cash ISA or Stocks & Shares ISA with another provider already this tax year, there’s no reason you can’t open another ISA of that same type with Moneybox.
For clarity, you cannot open more than one of each type of Lifetime ISA in a tax year (but you can transfer these between different providers). You also cannot open more than one of each type of Junior ISA for your child.
Why should you use your ISA allowance?
The simple answer is because if you don’t use it, you lose it. And what you’re losing out on is tax-free savings or investments. If you save without an ISA for example, you’ll be taxed on any interest you earn over a certain amount. This amount is different depending on your personal savings allowance, which is set according to your tax bracket and how much you earn – people with higher wages can earn less interest on their savings before they get taxed on it.
That’s not the case when you use an ISA – everything you earn is tax-free. So if you’re saving outside of an ISA but you have ISA allowance left to use this tax year, you might want to consider moving that money into an ISA to start using more of your allowance before it resets on 6th April.
And if you’re not saving with an ISA at all, you could be paying tax on your savings and investments that you otherwise wouldn’t have to. If you have an ISA, top up below to make the most of your tax-free allowance before it resets.
If you don’t have an ISA yet, click through to explore our accounts and start using your annual tax-free allowance.
If investing, capital at risk. All investing should be regarded as long term. The value of your investments can go up and down, and you may get back less than you invest.
With Lifetime ISAs, a 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA
Tax treatment depends on individual circumstances and may be subject to change in the future.