What Is the ISA Limit for 2024/25?

Individual Savings Accounts (ISAs) offer a method for individuals to save and invest money with tax advantages. Contributions to an ISA are made from after-tax income, but the growth within the account, whether from interest, dividends, or capital gains, is generally exempt from further taxation. The amount an individual can contribute to an ISA each year is subject to specific limits set by the government.

The Main Annual ISA Limit

For the 2024/25 tax year, the total annual contribution limit for adult Individual Savings Accounts is £20,000. This limit applies to each individual, meaning a person can save or invest up to this amount across all their ISAs combined within a single tax year. The tax year in the UK runs from April 6th to April 5th of the following year. This annual allowance resets at the beginning of each new tax year, and any unused allowance from a previous year cannot be carried forward.

The £20,000 allowance represents a total cap, not a per-account limit. The consistent application of this allowance across various ISA types allows for flexibility in how individuals choose to manage their tax-efficient savings.

Applying the Limit Across ISA Types

The single annual ISA limit of £20,000 can be distributed across different types of adult ISAs, each designed for distinct savings and investment goals. The primary types include Cash ISAs, Stocks & Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs. Contributions made to any of these accounts count towards the overall £20,000 annual allowance.

A Cash ISA functions similarly to a traditional savings account, allowing individuals to earn tax-free interest on their deposits. A Stocks & Shares ISA enables investment in a range of assets, such as company shares, bonds, and funds, with any capital gains or income generated remaining free from UK income tax and capital gains tax.

Innovative Finance ISAs (IFISAs) permit individuals to invest in peer-to-peer loans and other debt-based securities, with interest earnings being tax-free. The Lifetime ISA (LISA) is specifically designed to help individuals save for a first home or for retirement. It has a sub-limit of £4,000 per tax year within the overall £20,000 allowance. The government adds a 25% bonus to contributions made to a LISA, up to a maximum of £1,000 per year, providing a significant boost to savings.

Rules for Managing Your ISA Contributions

Individuals have flexibility in how they contribute to and manage their ISAs within the annual limit. From April 6, 2024, it became permissible to contribute to multiple ISAs of the same type in a single tax year, with the exception of Lifetime ISAs. For example, one can now pay into more than one Cash ISA or Stocks & Shares ISA with different providers, provided total contributions across all ISAs do not exceed the £20,000 annual allowance.

Transferring funds between ISAs does not count against the current year’s ISA allowance, whether from a previous tax year’s ISA or funds contributed in the current tax year.

Some ISAs are categorized as “flexible ISAs.” With a flexible ISA, money withdrawn during a tax year can be replaced within the same tax year without affecting the annual ISA allowance. For example, if funds are withdrawn, they can be replaced before the tax year ends without using up new allowance. This flexibility allows for temporary access to funds without permanently reducing the tax-efficient savings capacity, as long as the money is returned within the same tax year.

Junior ISA Limits

Junior ISAs (JISAs) provide a separate tax-efficient savings vehicle for children under 18, with their own distinct annual contribution limit. For the 2024/25 tax year, the JISA limit is £9,000. This allowance is separate from the adult ISA limit and does not affect an adult’s personal £20,000 allowance.

A parent or legal guardian typically opens a JISA, but anyone can contribute. The funds held within a JISA belong to the child and cannot be accessed until they reach the age of 18. At 18, the JISA automatically converts into an adult ISA, and the child gains full control over the funds.