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ISA rules and allowances: everything you need to know

Understand what the annual ISA allowance means for your money, how to get the most from it, and the ways other ISA rules work.


What is an ISA allowance?

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:

  • Cash ISA

  • Stocks and Shares ISA

  • Innovative Finance ISA

Alternatively, you can spread your allowance across different types of ISAs - for example, saving £10,000 in a cash 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.
What is an ISA?

What happens if I go over the ISA allowance?

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.

What are the key ISA rules?

From the number of ISAs you can have to age limits, there's a range of ISA rles you should be aware of.
Can I have more than one ISA?
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.
View our guide
Can I pay into two different ISAs in the same 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.
Do I have to declare any interest, income or capital gains I make on my ISA?
Under ISA rules, you don't have to declare interest, income, or capital gains on your tax return.
Is there an ISA age limit?
There are different age limits to open and use an ISA:
  • You need to be 16 to open a Cash ISA.

  • Under the Innovative Finance ISA and Stocks and Share ISA rules, the minimum age is 18.

    You can only open a Lifetime ISA if you're over 18 and under 40.
What are the ISA rules on death?
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.

How do ISA withdrawals work?

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:
  • Always check any terms and conditions, as ISA withdrawal rules and charges differ by provider.

  • Accounts such as Lifetime ISAs and fixed-term Cash ISAs only allow you to withdraw money in specific circumstances. Charges may apply too.
  • ISA withdrawals can affect any returns you make on investments within a Stocks and Shares ISA.

  • With Stocks and Shares ISAs, you should be willing to keep your money invested for at least five years. This is because investing for longer periods can help to offset short-term fluctuations in investment performance.

  • Some providers may not allow you to replace an ISA withdrawal you've made in the same tax year.

ISA tax and charges

An ISA is a tax-efficient way to save and invest as:
  • any interest your money earns over time in a Cash ISA is tax free

  • you don't pay tax on any investment returns your might make within a Stocks and Shares ISA

  • if you sell investments within a Stocks and Shares ISA, you won't be taxed either

However, you should be aware that although saving into an ISA offers many tax benefits, charges do apply with some types of ISAs:
Cash 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.
Stocks and Shares ISAs
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.
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