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ISA allowances explained
With an Individual Savings Account – more commonly known as an ISA – you can earn tax-free interest. But there is a limit on how much you can deposit each year. This guide explains more about your yearly ISA allowance.
How your ISA allowance works
Set by the government, the total amount you can save in ISAs within the current tax year is £20,000.
You could also take advantage of an additional £9,000 when you save for a child using a junior ISA.
You’ll find many ISA options available – some with minimum deposits from just £1 – making tax-free savings available to everyone.
What types of ISA are there?
Common types include:
- Cash ISA - a low risk way to earn tax-free interest on your account deposits.
- Stocks and shares ISA - although higher risk, investing your savings could provide greater tax-free returns.
- Lifetime ISA – helping people save for their first home, or for a more comfortable retirement. Deposit up to £4,000 for a 25% savings bonus from the government.
- Innovative finance ISA – connecting investors with businesses who need financing to grow. Again, this is higher risk, but the tax-free returns could be stronger.
- Help to Buy: ISA – these government-backed ISAs are no longer available. But, if you already have a Help to Buy: ISA, you can benefit up until November 2030.
You can only have one Help to Buy: ISA in a single tax year
Halifax currently offers cash ISAs and stocks and shares ISAs only. You can also transfer a Help to Buy: ISA if you already have one with another bank or financial provider.
Splitting your ISA allowance
You can spread your allowance across eligible ISAs within any tax year. That includes ISAs that aren’t held and managed by Halifax. Otherwise, how you use and split your allowance is up to you.
Below are some examples:
|
Cash ISA |
Stocks and Shares ISA |
Total ISA Allowance |
|---|---|---|
|
Cash ISA £0 |
Stocks and Shares ISA £20,000 |
Total ISA Allowance £20,000 |
|
Cash ISA £10,000 |
Stocks and Shares ISA £10,000 |
Total ISA Allowance £20,000 |
|
Cash ISA £20,000 |
Stocks and Shares ISA £0 |
Total ISA Allowance £20,000 |
When choosing an ISA, think about how much you can afford to save, how much access you need to that money, and how much risk you’re comfortable with.
Cash ISAs offer lower but more stable tax-free interest on your savings.
Stocks and shares ISAs are higher risk. The strength of your returns will be based on financial market conditions. Saving over a longer term could help to balance out the ups and downs. Always be aware that, when you invest, there’s a possibility you could both gain and lose money.
Tax treatment depends on individual circumstances and may change.
Are ISAs flexible?
With some ISAs, you might be able to access your money without it affecting your tax-free allowance. That’s providing you top your ISA up within the same tax year.
For example:
1. You pay £10,000 into a cash ISA, leaving half of your tax-free allowance.
2. You withdraw £5,000 from your ISA, leaving £5,000 in the account. A month later, you top your ISA up to £10,000 once again.
3. In this scenario, you’d still have an available ISA allowance of £10,000.
With other ISAs, there could be penalties when you withdraw money. Make sure you’re aware of any impact or charges before you go ahead.
Frequently asked questions
-
Each UK tax year starts on 6 April and ends on 5 April the following year. Your ISA allowance resets each year, following the same schedule as the tax year.
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No. You can only take advantage of your ISA allowance within a single UK tax year.
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You can check your ISA balances with Halifax online using Online Banking, or the Mobile Banking app. Otherwise, you can just give us a call.
If you have ISAs with any other banks or financial providers, you’ll need to refer to your accounts separately.
If you’ve withdrawn money from an ISA, remember to check the terms and conditions of your account. Some accounts will allow you to access your money and redeposit it without impacting your tax-free allowance – but some won’t.
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Yes. You can take out ISAs with different banks or financial providers if you like, as long as you don’t go over your ISA allowance.
Financial Services Compensation Scheme
Eligible deposits held with us are protected up to a total of £85,000 by the Financial Services Compensation Scheme (FSCS), the UK’s deposit guarantee scheme.
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