Individual Savings Accounts (ISAs) let you save tax-free each year, making them an attractive option for anyone looking to grow their savings. Each tax year, the government sets an ISA allowance – it’s the maximum amount you can save in ISAs without paying tax. For the current 2024/2025 financial year it’s £20,000.
If you’re considering opening an ISA or already have one but would like a quick guide to saving money, tax perks and transfers – keep reading!
What is a cash ISA?
ISAs are a good savings account option to help you get more out of your money. Cash ISAs are tax free up to the ISA allowance limit, meaning you don’t pay interest on the amount you earn. This tax efficient way to save could help you reach your financial goals faster, such as saving for a house deposit, wedding or big holiday.
Cash ISAs explained
Watch our two-minute explanation video about how Cash ISAs work
How many ISAs can I have?
You can have more than one ISA account open and various amounts in each. There are several types of ISAs such as:
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Cash ISA
Good for peer-to-peer lending
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Stocks and Shares ISA
An investment in the stock market without paying tax on your returns
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Innovative Finance ISA
Good for peer-to-peer lending
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Lifetime ISA (LISA)
Designed for long-term savings such as retirement or a first home
Rules if you have more than one ISA
There are some specific rules to be aware of if you open more than one ISA.
- You can have one of each type per year: You can pay into one Cash ISA, one Stocks and Shares ISA, one Innovative Finance ISA, and one Lifetime ISA within the same tax year.
- You can open multiple ISA accounts: You can only pay into one Cash ISA per tax year, but you are allowed to hold several Cash ISAs if these are accumulated over previous years and with different providers.
- As an example, you could pay £20,000 into one account or split the allowance across multiple accounts. The only exception is a Lifetime ISA, where the maximum you can pay in is £4,000.
- As an example, you could save £10,000 in a cash ISA, £3,000 in a stocks and shares ISA, £3,000 in an innovative finance ISA and £4,000 in a Lifetime ISA in one tax year.
How much money can you save in an ISA?
While you can save as much as you want in one or multiple ISAs, only contributions up to the £20,000 allowance are tax free. Any savings above this limit maybe subject to tax. Each year the government resets the ISA allowance, and your tax-free allowance is reset too. So, if you have £20,000 in ISAs currently, when the tax year 2025/2026 starts on 1st April 2025, you can deposit another £20,000 into a cash ISA and it would be tax free for this financial year.
Does transferring an ISA count towards your allowance?
You can transfer all or part of the savings in your Individual Savings Account (ISA) from one provider to another at any time. It can be to a different type of ISA or the same type.
Transferring funds from one ISA to another doesn’t affect your current year’s allowance as long as you use the proper transfer process offered by the provider you’re switching to. Withdrawing funds and then depositing them with another provider, instead of transferring them, could count as a new deposit and reduce your allowance.
You can only actively pay into one Cash ISA during the tax year. You might hold multiple Cash ISAs with different providers if you’ve opened them in previous years or transferred funds.
Check with your provider for any restrictions they may have on transferring ISAs. They may also make you pay a charge.
When does the ISA allowance reset?
The ISA allowance resets at each tax year. The tax year runs from 6 April to 5 April. Your ISAs don’t close when the tax year finishes. You’ll keep your savings on a tax-free basis for as long as you keep the money in your ISA accounts. You can’t carry any unused ISA allowance forward. Always review your contributions before 5th April to make the most of the current years’ allowance.
Explore our Cash ISAs
Cash ISAs are a flexible and tax-efficient way to save. We offer fixed and flexible terms of 1,2,3 and 5 years to suit your needs. With guaranteed interest rates, it’s a savings account that ensures your money is working hard for you.
Ready to start saving tax-free? Explore our cash ISAs
