Skip to content
Variable Rate Cash ISA

ISA Allowance Explained

No matter how much money you manage to save through hard work, you could find yourself paying tax on the interest.

But did you know that with an ISA, you can be smarter with taxed savings? Hurrah, more money for you!

Before you dive straight in, learn a little more about what an ISA allowance is and whether there are any ISA limits.

What is an ISA?

Let’s start with the basics. ISA stands for Individual Savings Account, which is essentially a tax-free savings account with a maximum amount you can save each year. This is the ISA limit, and you must not exceed it within the tax year. 

Investing in an ISA is a good way to start saving for your future and provides an opportunity to be smart with your money.

With a standard savings account, you may pay tax on the interest you earn. However, with an ISA, you don't, and won't, ever.

What is an ISA allowance?

An ISA allowance is the maximum amount of money that you can save in ISAs per tax year. In the UK, the tax year runs from 6 April to 5 April  of the next year.

Fortunately, you can transfer ISA funds from past tax years into your new ISA without affecting your current year’s allowance – as long as your provider allows it. But you cannot carry any used allowance into the next tax year. 

How much can you put in an ISA?

This current tax year, you can put in a total of £20,000 into an ISA. You can either split your ISA maximum allowance across different types of ISA accounts or invest it all in just one.

For example:
You could save £10,000 in a cash ISA, £6,000 in a stock and shares ISA, and £4,000 in a lifetime ISA.

Don’t forget that you may be able to transfer part or all of your money from an ISA saved in a previous tax year into a new ISA. So, if you saved £10,000 in a previous ISA in a different tax year, you may be able to transfer part or all of this into your new ISA, and still have your £20,000 allowance.

It’s also handy to remember that if you’re in a relationship and saving towards an investment together, like a house, you’ll both still have your allowance. This means that you could save up to a combined total of £40,000 a year.

How much can you put in a Junior ISA?

While you must be over 18 to open a regular ISA, if your children are serious about saving (or a family member wants to provide for them) then they could be eligible for a Junior ISA, sometimes referred to as a child ISA.

Up to £9,000 can be invested into a Junior ISA (JISA) per tax year.

Are there any ISA limitations to be aware of?

As well as the UK ISA allowance of £20,000 (this current tax year), there are a few more ISA limitations to keep in mind. These include:

  • You can only pay £4,000 into a Lifetime ISA per tax year.
  • You can’t transfer any non-ISA shares that you own into an ISA – unless these are from an employee share scheme.

Can I put £20,000 in an ISA every year?

Yes, you can put up to £20,000 into your account this current tax year – as long as you don’t exceed this ISA limit. You can add money to one of each type of ISA whenever you like, you just need to make sure that the accumulated amount does not rise above the maximum allowance.

What happens if you exceed your ISA limit?

If you accidentally exceed your ISA limit, HMRC will contact you and explain what you need to do to correct this.

For any amount you’ve paid in excess of £20,000, you won’t get any tax relief on these payments. 


Whether you're saving for something important, or just want to put some money away for a rainy day, Sainsbury’s Bank offer a wide range of savings accounts that could be suitable for you.