How much can you put in an ISA?


Personal Investments

05 April 2020

ISAs have generous tax benefits. For this reason, the Government limits how much you can pay into them each year. Read our guide to find out more about your annual allowance and what you can do with it.

What is the annual ISA allowance?

There is a maximum amount you can save or invest in an ISA each tax year – this is known as your annual allowance. For the 2020/21 tax year, the ISA allowance is £20,000.

You can split your allowance across any combination of ISAs during the same tax year as long as you’re eligible.

Under the old system, there were limits on how much you could save into each type of ISA, but in July 2015 the  rules were relaxed. You now have the freedom to choose how you split your allowance between a cash ISA, stocks and shares ISA and Innovative Finance ISA. Some people can also have a Help to Buy ISA and Lifetime ISA, although there is a smaller limit on how much you can put in these.

Your ISA allowance resets every year

The tax year runs from April 6 to April 5. At the beginning of each new tax year you get a fresh ISA allowance, decided by the Government. You can either open a new ISA or top up an ISA you already hold.

Any savings or investments held within an ISA will continue to earn tax-free interest on interest, so you can build up a substantial nest egg over time.

You’re not allowed to carry your allowance over between years, so if you don’t use it, you lose it.

But if you have a flexible ISA you are allowed to take money out of your ISA and replace it in the same tax year without using up your allowance.

How much can you put in a Lifetime ISA?

You can only put £4,000 in a Lifetime ISA each year, either as a lump sum or on an ad-hoc basis. The Government will then add a 25% bonus on top. So, if you save the full £4,000 you’ll get £5,000. Not everyone can have this kind of ISA though – you have to be aged between 18 and 40 to open an account. You’ll receive the bonus until you reach the age of 50.

You can pay up to £9,000 into a Junior ISA each year for a child under the age of 18. From the age of 16, a child can also have an adult cash ISA along with a Junior ISA. In theory, that means they could have £9,000 a year in the Junior ISA, but also save up to £20,000 extra in an adult cash ISA between the ages of 16 and 18.

How you can split your ISA allowance

You can divide up your allowance however you like. You could put the whole £20,000 in a cash ISA, or all of it in a stocks and shares ISA – or even an Innovative Finance ISA. Or a combination of all three.

For example, you could put £4,000 in a cash ISA, £11,000 in a stocks and shares ISA and £5,000 in an Innovative Finance ISA.

The only rule is that, when combined, your ISA savings for the current tax year don’t go over the £20,000 threshold.


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Risk warning

Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

Please note the information, data and any references in this article were accurate at the time of writing. Please check the date of the content if you’re looking for up to date investment commentary or tax-year related information.

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