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Your ISA allowance
Individual Savings Accounts – ISAs for short – give you the opportunity to save a set amount of money each year, tax free. This is known as your ISA allowance.
What is the maximum ISA allowance?
There is a limit on how much you can pay into your ISAs each year. For the current tax year, the total ISA allowance is £20,000.
If you’d like to save on behalf of a child, you can also open a Junior ISA to save an extra tax free sum. For the current tax year, that’s up to £9,000.
You don’t have to pay in the maximum £20,000 to take advantage of your ISA allowance. Some accounts have a minimum deposit amount, while others start from as little as £1.
How your ISA allowance works
There are rules on how many ISAs you can pay money into each tax year, although you can pay into more than one cash or stocks and shares ISA in a tax year.
Your ISA allowance applies to the combined sum you put into all of your ISA accounts.
Below are the main types of ISA:
- Cash ISA – a savings account that lets you earn tax-free interest on the money you save.
- Stocks and shares ISA – lets you invest in stocks, shares and funds, tax-free.
- Lifetime ISA – can be used to buy your first home or save for later life. You can save up to £4,000 each year and the government will add a 25% bonus on top.
- Innovative finance ISA – a form of peer-to-peer lending that links investors to individuals or businesses that want to borrow. These are usually higher risk but offer higher potential rewards.
- Help to Buy: ISA – although this government scheme is no longer available, if you already have a Help to Buy: ISA, you can continue to benefit up to November 2030.
Lloyds Bank don’t currently offer lifetime, innovative finance or Help to Buy ISAs.
How much money can you put into an ISA?
While there is a limit on how much you save tax-free each year in your ISAs, you can split your allowance across the different types.
As an example, you might pay £10,000 into a Stocks and Shares ISA, £6,000 into a cash ISA and £4,000 into a Lifetime ISA. Below are some other examples:
|
Cash ISA |
Stocks and shares ISA |
Lifetime ISA |
Innovative finance ISA |
Total ISA allowance |
|---|---|---|---|---|
|
Cash ISA £20,000 |
Stocks and shares ISA £0 |
Lifetime ISA £0 |
Innovative finance ISA £0 |
Total ISA allowance £20,000 |
|
Cash ISA £0 |
Stocks and shares ISA £16,000 |
Lifetime ISA £4,000 |
Innovative finance ISA £0 |
Total ISA allowance £20,000 |
|
Cash ISA £10,000 |
Stocks and shares ISA £10,000 |
Lifetime ISA £0 |
Innovative finance ISA £0 |
Total ISA allowance £20,000 |
The way you use your ISA allowance is up to you, factoring in how much you can afford to save, and for how long.
Higher risk options like stocks and shares or innovative finance ISAs, are usually best for long-term saving, giving your money time to grow, and recover from fluctuations in the financial market. There’s a chance you could lose money if your funds fall in value.
Cash ISAs on the other hand, provide lower but more predictable returns on your savings.
It’s important to know:
- The maximum you can pay into a Lifetime ISA each tax year is £4,000.
- A Help to Buy: ISA counts as a cash ISA, so you can only have one or the other.
Lloyds Bank don’t currently offer lifetime, innovative finance or Help to Buy ISAs. However, you can transfer a Help to Buy: ISA that you hold with another bank or financial provider.
How flexible are ISAs?
You may be able to withdraw money from selected ISAs, without it affecting your tax-free allowance, so long as you pay the funds back in within the same tax year.
Below is an example, based on simple cash ISA:
- You pay £5,000 into a cash ISA, leaving you with £15,000 of your tax-free allowance remaining.
- You withdraw £1,500, leaving £3,500 in your ISA. A month later, you pay £1,500 back in, giving you £5,000 total.
- In this scenario, you’d still have an available budget of £15,000 for the rest of the tax year.
Not all ISAs work in this way, so check the terms of your account so that you understand any penalties. Charges may also apply to withdrawals.
Frequently asked questions
-
Your ISA allowance resets at the start of each tax year, which is in early April.
-
No, your tax-free allowance does not roll over to the next year. From tax year to tax year – April to April – the maximum allowance applies to the total saved across all of your ISAs.
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It’s your responsibility to manage your ISA savings, and declare any taxable income to HM Revenue & Customs (HMRC). That includes any interest you receive on savings, over and above your ISA allowance and personal savings allowance.
If you exceed your ISA allowance at any point, you can resolve this yourself by making a withdrawal, but it’s still worth contacting HMRC to have the situation recorded.
If you don’t spot the error, HMRC will contact you. All ISA activity is reported by your bank or financial provider.
-
Yes, you can split your ISA allowance between multiple banks or financial providers, as long as:
- You have or contribute to no more than one Lifetime ISA, Innovative Finance ISA or Help to Buy: ISA.
- The total saving amount does not exceed your ISA allowance for that tax year.
-
If you have an ISA with Lloyds Bank, you can check how much of your ISA allowance you’ve used this tax year on the mobile app, online or over the phone. For any other ISAs you hold, you should contact each provider individually.
Why save with Lloyds Bank?
Important legal information
Lloyds and Lloyds Bank are trading names of Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.
Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). We are covered by the Financial Ombudsman Service (FOS).
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