What Is the ISA Annual Allowance?
Each tax year, UK residents can deposit up to a set amount into ISAs without paying tax on the returns. For the 2024/25 tax year, this limit — known as the ISA annual allowance — is £20,000. This has remained unchanged since 2017/18.
The UK tax year runs from 6 April to 5 April the following year. Any unused allowance cannot be carried over to the next tax year — it is lost permanently if not used.
How the Allowance Is Split
You can spread your £20,000 across multiple ISA types in a single tax year, but subject to some rules:
- Cash ISA, Stocks & Shares ISA, and Innovative Finance ISA — you can contribute to all three, as long as the total does not exceed £20,000.
- Lifetime ISA — capped at £4,000 per year (this counts toward your overall £20,000 limit).
- Junior ISA — a separate allowance of £9,000 per tax year for children; this does not affect the adult ISA allowance.
Example Allocation
| ISA Type | Contribution |
|---|---|
| Cash ISA | £5,000 |
| Stocks & Shares ISA | £11,000 |
| Lifetime ISA | £4,000 |
| Total | £20,000 |
Who Is Eligible?
To open and contribute to an adult ISA, you must:
- Be aged 18 or over (16+ for a Cash ISA under old rules — note rules changed from April 2024)
- Be a UK resident
- Have a valid National Insurance number
Crown employees (such as diplomats or armed forces personnel) posted overseas, and their spouses, may also be eligible even if not UK-resident. Check HMRC guidance if this applies to you.
Flexible ISAs: Can You Replace Withdrawn Money?
Some ISA providers offer flexible ISAs. With a flexible ISA, you can withdraw money and replace it in the same tax year without it counting as a new contribution against your allowance. For example, if you deposited £10,000 and withdrew £3,000, you could put that £3,000 back in later without it using up additional allowance.
Not all providers offer this feature, so it's worth checking before you open an account if flexibility matters to you.
What Happens If You Exceed the Allowance?
If you accidentally overpay into your ISAs in a tax year, HMRC will notify you. The excess amount will not receive ISA tax benefits. You should contact HMRC promptly if you think you've breached the limit. Providers do have systems in place to prevent overpayments, but it's your responsibility to track contributions across all accounts.
Tips for Using Your Allowance Effectively
- Start early in the tax year: Putting money in at the start of April rather than the end of March gives it an extra year of tax-free growth.
- Set up a regular standing order: Regular monthly contributions help you invest consistently and smooth out market ups and downs (known as pound-cost averaging).
- Don't let the allowance expire: The deadline is always 5 April — unused allowance cannot be reclaimed after that date.
- Use the Lifetime ISA bonus: If you're under 40 and saving for a first home or retirement, the 25% government bonus is effectively free money on top of your savings.
Will the Allowance Change?
The ISA allowance is set by the UK government and can change at each Budget. It's worth reviewing HMRC announcements each spring to stay up to date. Historically, the allowance has generally increased over time, though it has been frozen at £20,000 since 2017.