How Much Can I Pay Into My ISA? Annual Limits Explained

Individual Savings Accounts (ISAs) offer a tax-efficient way to save and invest in the United Kingdom. These accounts allow individuals to shelter their money from income tax, capital gains tax, and dividend tax on any earnings within the ISA wrapper.

The UK tax year begins on April 6th and concludes on April 5th of the following year. This annual cycle governs ISA contribution limits. The allowance resets at the start of each new tax year, and any unused allowance cannot be carried forward.

The Annual ISA Contribution Limit

The annual ISA allowance for the 2024/2025 and 2025/2026 tax years is £20,000. This is the maximum total an individual can contribute across most types of adult ISAs within a single tax year. The allowance applies to all adult ISA savings combined, not to each individual ISA account.

This £20,000 limit is a combined allowance. Contributions to different eligible ISA products count towards this single cap. For example, if an individual contributes to a Cash ISA and a Stocks & Shares ISA, the total sum across both cannot exceed £20,000. This structure allows flexibility in how savings are allocated while maintaining an overall cap.

Specific Limits for Each ISA Type

Different ISA types serve distinct financial purposes and come with their own specific rules and contribution limits.

Cash ISAs

Cash ISAs are designed for cash savings, offering tax-free interest on deposits. The money contributed to a Cash ISA counts towards the overall annual ISA allowance of £20,000. As of April 6, 2024, the minimum age to open a new Cash ISA is 18 years old.

Stocks & Shares ISAs

Stocks & Shares ISAs facilitate investments in a range of assets, such as funds, shares, and corporate bonds, with any gains or income remaining free from UK tax. Contributions to a Stocks & Shares ISA fall under the £20,000 annual allowance.

Innovative Finance ISAs (IFISAs)

Innovative Finance ISAs (IFISAs) allow individuals to invest in peer-to-peer lending and crowdfunding debentures. They provide a tax-free wrapper for the interest earned from these alternative investments. The amount contributed to an IFISA also counts towards the £20,000 annual ISA allowance.

The Lifetime ISA (LISA)

The Lifetime ISA (LISA) is designed to help individuals save for their first home or retirement. It has a specific annual contribution limit of £4,000. For every £4 contributed to a LISA, the government adds a 25% bonus, up to a maximum of £1,000 per tax year.

To open a LISA, an individual must be aged between 18 and 39, and contributions can continue until age 50. Funds can be withdrawn tax-free, including the bonus, for a first home purchase (up to £450,000, after the account has been open for 12 months) or from age 60. Unauthorized withdrawals for other purposes before age 60 incur a 25% charge, recovering the government bonus and potentially some of the original savings.

Junior ISAs (JISAs)

Junior ISAs (JISAs) are long-term savings accounts for children under 18, with a separate annual contribution limit of £9,000 for the 2024/2025 and 2025/2026 tax years. This allowance is entirely independent of the adult ISA allowance, meaning contributions to a JISA do not affect an individual’s own £20,000 limit. Money saved in a JISA belongs to the child but cannot be accessed until they turn 18, at which point the account automatically converts to an adult ISA. A child can hold one Junior Cash ISA and one Junior Stocks & Shares ISA, with the £9,000 limit applying across both.

Managing Contributions Across Multiple ISAs

Navigating the rules for contributing to multiple ISAs within a single tax year requires understanding how the overall allowance is allocated. The £20,000 annual ISA limit provides flexibility for individuals to tailor their savings strategy across various account types.

The overall annual ISA limit can be split across Cash, Stocks & Shares, and Innovative Finance ISAs in any combination, provided the total contributions do not exceed £20,000. For example, an individual could contribute £10,000 to a Cash ISA and £10,000 to a Stocks & Shares ISA within the same tax year. Since April 6, 2024, individuals are permitted to contribute to more than one ISA of the same type (e.g., two Cash ISAs or two Stocks & Shares ISAs) within the same tax year, a change from previous rules.

A Lifetime ISA (LISA) can be opened and contributed to in the same tax year as other ISA types. However, an individual can only contribute to one Lifetime ISA in any given tax year. The specific £4,000 annual limit for the LISA counts towards the overall £20,000 ISA allowance. For example, if £4,000 is paid into a LISA, the remaining £16,000 of the allowance can be used across other ISA types.

Transferring funds between existing ISA accounts generally does not count towards the current year’s contribution allowance. For instance, moving money saved in a Cash ISA from a previous tax year to a new Stocks & Shares ISA does not impact the £20,000 limit for the current year. Since April 6, 2024, it is also possible to make partial transfers of current year contributions. The crucial aspect is that the transfer process must be managed directly between ISA providers to maintain the tax-free status of the funds.