ISA allowance

Most people in the UK will get an ISA allowance, as long as they have an ISA open. It’s automatic, and there’s nothing to set up.

The current ISA allowance is £20,000 per tax year, which runs from April 6th to April 5th the following year. So, on April 6th every year you get a brand new allowance of £20,000. It replaces the previous year’s allowance, it’s not in addition to it, so it’s ‘use it or lose it’.

This means you can add up to £20,000 into either one, or as a total across multiple eligible ISAs during that tax year*. All the money you make from that money, such as earning interest, or the money growing in value (such as if it’s invested), will be free from tax.

The tax you might otherwise pay is income tax, capital gains tax and dividend tax. And would depend on how you make the money within your ISA.

*Except a Lifetime ISA (which is for saving for your first home), where you can only open a new one each tax year, and can only save £4,000 per tax year (which is part of your £20,000, so you have £16,000 to save within other ISAs).