What is the ISA allowance for 2019/2020?
Each tax year, which runs from 6 April to 5 April, every eligible adult has an annual allowance that they are entitled to invest in a tax efficient ISA.
The current allowance for 2019/20 is £20,000, which can be invested into a cash ISA, a stocks and shares ISA or a combination of both.
If you don’t use a proportion of the cash option, then this can be invested in a stocks and shares ISA. For example:
If you invested £8,000 in a cash ISA you can invest up to £12,000 in a stocks and shares ISA.
You can’t carry over any unused ISA allowance into the following tax year.
Couples can both use their ISA allowance, which means between them they can invest a total of £40,000 each tax year.
Children who were not eligible for a Child Trust Fund (CTF) also have their own, Junior ISA annual allowance. The current allowance for 2019/20 is £4,368.
You can choose to save in the following ways:
- Use the full £20,000 in a stocks and shares ISA.
- Use the full £20,000 in a cash ISA.
- A combination of amounts between a stocks and shares ISA and cash ISA up to the overall limit of £20,000.
Stocks and shares ISA
- Please remember the value of your investment and any income from it may fall as well as rise.
- You may get back less than you invest.
- Although there is no fixed term you should consider stocks and shares ISAs and unit trust investments to be medium to long term, ideally five years or more.
- Please remember the value of your child’s investment may fall as well as rise and your child may get back less than the amount invested.
- The money invested in a stocks and shares Junior ISA is locked away until your child becomes 18 and then rolls up into an adult ISA. You should consider it to be a medium to long-term investment, ideally of five years or more.
The tax efficiency of ISAs is based on current rules. The current tax situation may not be maintained. The benefit of the tax treatment depends on individual circumstances.
Being a tax smart investor
How you allocate your long-term savings between cash, bonds, shares and commercial property investment funds can have a big impact on how your money can grow.