The ISA allowance is the amount of money you can save and invest across your Individual Savings Accounts (ISAs) in a single tax year. This annual ISA limit is set by the government and stands at £20,000 for the 2022/2023 tax year.
Under current ISA rules, you can save the full £20,000 each tax year in one of the following:
Alternatively, you can spread your allowance across different types of ISAs – for example, saving £10,000 in a Cash ISA and investing £10,000 in a Stocks and Shares account. If you have a Lifetime ISA, you can only put £4,000 into it each year..
If you make a payment into your ISA that pushes you over the annual allowance, your provider should simply reject it and return it to you. If this doesn’t happen automatically, contact your provider or HM Revenue & Customs (HMRC).
Any interest or returns your savings and investments generate are tax free up to the £20,000 annual ISA limit.
From the number of ISAs you can have to age limits, there’s a range of ISA rules you should be aware of.
You can have multiple ISAs of each type. However, it’s only possible to open one of each type of ISA in a tax year.
You can’t pay into multiple ISAs of the same type during a single tax year. For example, you can’t pay into two Stocks and Shares ISAs. But you can pay into one of each type of ISA, for example a Stocks and Shares ISA and a Cash ISA.
Under ISA rules, you don’t have to declare interest, income, or capital gains on your tax return.
There are different age limits to open and use an ISA:
Your provider will close your ISA three years and one day after you pass away. Alternatively, the executor of your estate can close your ISA, or it will close when your estate administration is completed.
Depending on how your account is set up, you should be able to request a withdrawal online, in person, or by phone. And you can take money at any point, without losing your tax benefits.
Before withdrawing money from an ISA, consider the following:
An ISA is a tax-efficient way to save and invest as:
However, you should be aware that although saving into an ISA offers many tax benefits, charges do apply with some types of ISAs:
Charges can apply if you withdraw money from a fixed-term Cash ISA early. Depending on your provider’s ISA transfer rules, you may also have to pay a fee if you move cash from one ISA to another. Generally, you don’t pay charges to hold a Cash ISA though.
You’ll usually pay a regular charge to hold a Stocks and Shares account to cover things like administration, online support and withdrawals. This ‘platform charge’ may change depending on the amount of money you invest. There are also charges related to the investments you choose.
Apply online in minutes – make sure you have your National Insurance number and debit card/bank details handy.Open an ISA