How Much Money Can You Have in an ISA?

An Individual Savings Account, commonly known as an ISA, is a tax-efficient savings and investment vehicle within the United Kingdom. Its primary purpose is to help individuals save and invest without incurring UK income tax or capital gains tax on the returns generated from the funds held within the account. This tax-advantaged status allows savers to keep more of their earnings and investment growth.

The Annual ISA Contribution Limit

The UK government sets an annual limit for ISA contributions each tax year. For the 2025/2026 tax year, the adult ISA allowance stands at £20,000. This allowance applies to new money contributed within a single tax year, which runs from April 6th to April 5th of the following year.

This £20,000 limit pertains to the amount of new money deposited into ISAs, not the total value of assets held within them. Any interest, dividends, or capital gains earned on investments within an ISA do not count towards this annual allowance, allowing the overall value of the ISA to grow beyond the contribution limit without penalty. To be eligible for an adult ISA, an individual must be 18 years or older and a resident of the UK for tax purposes.

This single annual allowance can be distributed across different types of adult ISAs. For example, an individual could allocate a portion to a Cash ISA and another portion to a Stocks & Shares ISA, provided the total contributions do not exceed the £20,000 overall limit. As of April 2024, individuals can subscribe to multiple ISAs of the same type within a single tax year, though some providers may still have their own limitations.

Navigating Different ISA Types

The UK offers several types of ISAs, each designed for specific savings or investment goals, and their contribution rules interact uniquely with the overall annual allowance. Understanding these distinctions is important for maximizing tax-efficient savings.

Cash ISAs, Stocks & Shares ISAs, and Innovative Finance ISAs (IFISAs) are the primary adult ISA types whose contributions directly count towards the overall £20,000 annual allowance. A Cash ISA functions similarly to a regular savings account, but the interest earned is free from UK income tax. Stocks & Shares ISAs allow investments in a range of assets like company shares, funds, or bonds, with any capital gains or dividends remaining free from UK taxes. Innovative Finance ISAs enable individuals to invest in peer-to-peer lending or crowdfunding, offering tax advantages on the returns generated from these investments.

The Lifetime ISA (LISA) has a specific annual contribution limit of £4,000, which is part of, rather than in addition to, the overall £20,000 ISA allowance. Individuals aged 18 to 39 can open a LISA and contribute to it until their 50th birthday. The government adds a 25% bonus to contributions, up to a maximum of £1,000 per year, which is intended to help with buying a first home or saving for retirement.

Withdrawals from a LISA for purposes other than purchasing a first home (up to £450,000) or after age 60 typically incur a 25% government withdrawal charge.

In contrast, the Junior ISA (JISA) operates with its own separate annual allowance, set at £9,000 for the 2025/2026 tax year. This type of ISA is designed for individuals under the age of 18, and contributions made to a JISA do not affect the adult ISA allowance. Money held in a JISA belongs to the child and cannot be accessed until they turn 18, at which point the account automatically converts into an adult ISA. Anyone can contribute to a JISA on behalf of the child, as long as the total remains within the £9,000 limit.

Managing Your ISA Subscriptions and Transfers

Beyond the specific contribution limits for each ISA type, there are rules governing how individuals can manage their subscriptions and transfer funds between accounts. Transferring funds between ISAs is a common practice to consolidate holdings or seek better rates, and it does not count towards the annual ISA allowance.

When transferring current year subscriptions, the entire amount contributed in that tax year must be moved. For funds subscribed in previous tax years, individuals typically have the option to transfer all or part of the money. The transfer process is usually initiated by the new ISA provider, which handles the movement of funds directly, ensuring the tax-advantaged status is maintained.

Some ISAs offer “flexible” features, which allow individuals to withdraw money and replace it within the same tax year without affecting their annual allowance. This means if £5,000 is withdrawn from a flexible ISA, that £5,000 can be paid back into the same ISA before the end of the tax year, and it will not consume any additional part of the £20,000 annual allowance. This contrasts with non-flexible ISAs, where every deposit counts as a new subscription, and withdrawn funds cannot be replaced without using up more of the allowance. However, Lifetime ISAs are not flexible, and withdrawals outside of specific conditions may incur a penalty.