Individual Savings Accounts, or ISAs, offer a straightforward way to save or invest money in a tax-free way in the UK. But you have to pay attention to the amount you put away in order to get the most out of this option. The total amount you can save in a tax year in ISAs in the current 2021/2022 tax year is set at £20,000. This is known as the ISA allowance.

You can only put money into one of each type of ISA: a cash ISA, a stocks and shares ISA, an innovative finance ISA or a Lifetime ISA in each tax year. You can also choose to split your allowance between the different types, but you can’t invest more than a total of £20,000 across all ISA types in a single tax year.

If you don’t invest the full amount in one tax year, the rest of the allowance will be lost, as you are not allowed to roll it over to the next year. Bear in mind that you have to invest by 5 April, that is when the tax year ends, for it to count into the current year’s allowance. However, savings or investments which stay within the ISA wrapper you started in previous years will continue to earn interest free of taxes until you withdraw the funds. 

Over time you can accumulate a lot of ISA accounts. For instance, let’s say you decide to invest the maximum £20,000 in a cash ISA this tax year. But next year you decide that you want to take a bit more risk, and set up a stocks and shares ISA for £10,000. You also decide to invest the other remaining £10,000 allowance into a cash ISA with a different provider than the previous year because this one offers better rates. Now you already have three ISAs in the total amount of £40,000, all working to earn you interest tax-free.

You can continue to further increase your ISA account portfolio for years – just make sure you can keep track of them. 

Author of this article

Gergely Korpos

Author of this article

Gergely is the co-founder and CPO of Brokerchooser. His aim is to make personal investing crystal clear for everybody. Gergely has 10 years of experience in the financial markets. He concluded thousands of trades as a commodity trader and equity portfolio manager.

Gergely Korpos

Co-founder, CPO

Gergely is the co-founder and CPO of Brokerchooser. His aim is to make personal investing crystal clear for everybody. Gergely has 10 years of experience in the financial markets. He concluded thousands of trades as a commodity trader and equity portfolio manager.

Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology

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