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ISA Allowance

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If you’re looking to make the most of tax-free savings, it makes sense to take full advantage of your ISA allowance. Your allowance is the amount you’re allowed to save in your ISA(s) each year, which saves you from paying tax on the interest you earn. On this page, we’ll take you through how the allowance works, how much you can save tax-free this year and some of the rules around paying in and withdrawing.

This year's ISA allowance

The ISA allowance has changed over the years, so it’s important that you keep track of how much you’re allowed to save. Your ISA allowance for this tax year is: £20,000.

However, some types of ISA have their own limits.

Lifetime ISA (LISA) allowance

Eligible savers can deposit up to £4,000 per tax year into a LISA. This forms part of the overall £20,000 ISA allowance, so if you save £4,000 into a LISA, you could still save the remaining £16,000 of your ISA allowance into different types of ISAs.

Junior ISA allowance

The allowance for Junior ISAs this tax year is £9,000.

How does the ISA allowance work?

You can split your ISA allowance between different types of ISA. For instance, if you paid £4,000 into your LISA (the maximum you can save each year in a LISA), £10,000 into a Cash ISA and £6,000 into a Stocks and Shares ISA, that would make up your full allowance. The tax treatment of savings and investments depends on personal circumstances. Tax rules may change in future.

It’s important to remember that the ISA allowance is a total; you don’t get a new allowance for each account.

When does my allowance renew?

Your allowance renews on 6 April at the start of each new tax year. If you’re looking to top up before the allowance renews, make sure you do it before the last payment deadline for current year's ISA subscriptions.

If I withdraw my money, do I lose my allowance?

If your ISA isn’t flexible, you can only deposit £20,000 in total during the course of the tax year, no matter how much you take out.

With a flexible ISA, you can withdraw and replace your money without affecting your tax-free allowance. You just have to make sure your payments are put back into the same account and in the same tax year as the withdrawal. For example, if you have already paid £10,000 into your ISA during the current tax year, you can withdraw £5,000 and still pay in another £15,000 before you reach your annual £20,000 limit. See our Flexible ISAs page for more info.

Do ISA transfers count towards my allowance?

ISA transfers are different from withdrawing from one ISA and paying into another. When you transfer funds from one ISA to another by ISA transfer, the money will keep its tax-free status and it won’t affect this year’s ISA allowance. However, if you withdraw from an ISA and pay into another, the money you deposit would lose its tax-free status and would count towards your current tax year’s ISA allowance.

The rules are a little different for transfers into LISAs. If you transfer previous tax year’s savings into a LISA from a different type of ISA, it will count towards the annual LISA allowance. You can read more about this on our ISA Transfer page.

What should I do if I go over my allowance?

Since it was introduced back in 1999, the ISA allowance has never been reduced, but it’s always important to check to make sure you’re not going over the limit.

If you do think you’ve paid in more than you’re allowed, or you’ve paid into more than one of the same type of ISA in the same tax year, contact your ISA provider straight away. You should also get in touch with HMRC to let them know.

Accidents happen, but it’s always important to set the record straight as soon as you can.

What happens to my allowance when I die?

If you have a spouse or civil partner, they will inherit an extra ISA allowance equal to the value of any ISA savings you had. This allows them to increase the amount they save tax-free in ISAs, even if you leave the funds in your ISAs to someone else. This allowance is called the Additional Permitted Subscription allowance.

To find out how it works, see our Additional Permitted Subscription page.

Know your ISA

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