How Much Money Can You Put in an ISA?

Individual Savings Accounts, commonly known as ISAs, are a savings vehicle in the United Kingdom. These accounts offer a tax-efficient way for individuals to save or invest money, shielding gains from income tax, capital gains tax, and dividend tax. Understanding contribution limits is important for maximizing their benefits. This article details the amounts that can be contributed to various ISA types each tax year.

The Main Annual ISA Allowance

The UK tax year operates from April 6th to April 5th, and a new ISA allowance becomes available at the start of each new tax year. For the 2024-2025 tax year, the overall annual ISA allowance is set at £20,000. This is the maximum total an individual can contribute across all ISA accounts within that single tax year. This limit applies specifically to new money paid into ISAs during the current tax year.

This allowance resets annually, meaning any unused portion from a previous tax year cannot be carried forward. Therefore, individuals must utilize their allowance before the tax year concludes on April 5th.

Distributing Your Allowance Across ISA Types

While there is a single overall annual ISA allowance, individuals have flexibility in how they distribute this amount across different types of adult ISAs. The main categories include the Cash ISA, Stocks & Shares ISA, and Innovative Finance ISA (IFISA). You can contribute to one or more of these types within the same tax year, provided total contributions do not exceed the £20,000 limit.

For instance, an individual could put £10,000 into a Cash ISA and the remaining £10,000 into a Stocks & Shares ISA. Alternatively, the entire £20,000 allowance could be placed into a single ISA type, such as a Stocks & Shares ISA.

Special Rules for Specific ISAs

Certain ISA types have specific annual contribution limits that differ from the main allowance and come with unique eligibility criteria. The Lifetime ISA (LISA) helps individuals save for a first home or retirement. For 2024-2025, the maximum that can be contributed to a LISA is £4,000 annually. This £4,000 limit counts towards the overall £20,000 annual ISA allowance. Individuals must be aged 18 and 39 to open a LISA and can contribute until their 50th birthday, receiving a 25% government bonus on contributions.

The Junior ISA (JISA) is another distinct account, established for children under 18. A JISA has its own separate annual contribution limit of £9,000 for the 2024-2025 tax year. This allowance is independent of the adult ISA allowance, meaning contributions to a child’s JISA do not affect a parent’s or guardian’s own ISA limit. Money saved in a JISA belongs to the child and generally cannot be accessed until they turn 18.

Managing Over-Contributions and Transfers

If an individual contributes more than their annual ISA allowance, the excess amount loses its tax-free status. It is the account holder’s responsibility to monitor contributions across all ISA providers to avoid exceeding limits. Should an over-contribution occur, the ISA provider or HM Revenue & Customs (HMRC) will typically identify the excess. Excess funds and associated gains are typically removed from the ISA wrapper and become subject to standard taxation.

Transferring funds between ISAs does not count towards the annual contribution limit if handled correctly. Funds saved in previous tax years can be transferred between ISA providers or different types of ISAs without impacting the current year’s allowance. For contributions made in the current tax year, transferring to a new provider or ISA type will count towards the allowance. Since April 2024, new rules allow for partial transfers of current year ISA contributions, offering greater flexibility.