The ISA Age Limit – Is there one?

Individual Savings Accounts (ISAs) are available for almost everyone. Junior ISAs are available for those under 18. When you reach 18, you can have an ‘adult’ cash ISA, or if you wish to continue saving, you can invest in a stocks and shares ISA. There is no overall age limit for ISAs.

Can you open an ISA every year?

Yes, you can. At present, you can open as many ISAs as you like in a year, but only one of each type. However, this will change from the 6th of April 2024, after which you can open and pay into as many same type ISAs as you like each year, provided you don’t exceed your annual ISA allowance.

Is there an age limit on ISA accounts for children?

Yes, there is. The ISA age limit on Junior ISAs ranges from the date of birth up until the child’s 18^th birthday. Parents and legal guardians can start a Junior ISA for a baby immediately. The child cannot access the account until their 18th birthday when the Junior ISA account automatically changes to an adult ISA.

Other ISAs and their ISA age limit requirements

Apart from the Junior ISA, the only other ISA with an ISA age limit you need to be aware of is the Lifetime ISA or LISA for short. These ISAs are designed to assist those aged between 18 and 39 with saving for their first home or for retirement. You can contribute up to £4,000 per year until you’re 50, and within this range of age ISA, the government gives you a 25% bonus on contributions made.

ISA allowance growth over the years

When ISAs were first launched in 1999 to replace PEPs (Personal Equity Plans), the ISA allowance was £7,000 per annum. In 2009, it was increased to £10,200, and in 2010, it was raised again to £10,680. In 2011, it went up to £11,280, and in December 2012, it was announced that it would be increasing to £11,520.

In answer to how much ISA allowance 2013 would be, it was announced it would increase to £11,880. You could split it how you liked. You could for example put say £2,000 into a cash ISA, and £9,880 into best ISA investments 2013, stocks and shares ISAs, or even put the whole £11,880 in to the latter for those comfortable with accepting an element of risk.

In subsequent years, the ISA allowance continued rising until, in 2017, it rose to the level at which it remains today – £20,000 per annum.

Despite there being an ISA for every ISA age group, older savers are more likely to use their annual ISA allowance and dominate the usage rates.

Older savers more likely to use their ISA allowance

Around 21.6 million individuals held an Adult ISA in the 2013-14 tax year. Of those 6.2 million ISA holders were over the age of 65. Those over the age of 65 are five times as likely to hold an ISA than those under the age of 25.

However, in 2013-14 (latest data available) that gap showed signs of beginning to close as the 65 and over age bracket were three times as likely to use their ISA allowance than those under the age of 25.

The size of savings in an ISA also increased with age. Those with ISA savings over the value of £30,000 are most likely to be over the age of 65, whilst those with an ISA under the value of £3,000 are highest amongst the under-25 age group.

Younger savers should start investing

According to data from HMRC regarding how old ISA savers aged between 45 and 64 are most likely to save using a stocks and shares ISA, the earlier you can start, the better.

Since investments should be used as part of a long-term financial strategy, younger individuals need to start considering investing their ISA allowance as soon as they can, particularly at periods of low-interest rates when cash savings are being eaten away by inflation.

Positively, about 78% of those under the age of 25 are active savers. Data shows a decrease in the popularity of ISAs with those in the younger age brackets compared to previous years.

See how the Moneyfarm Stocks & Shares ISA could work for you

Making the most of your ISA allowance within the ISA age limit

Regardless of any ISA age limit, there is one simple thing to do when managing your money: open an ISA as age permits or more than just one. The £20,000 ISA allowance allows you to get tax-free returns and is something the Government factors in to the Budget. We also have the personal savings allowance and interest rates are low; there is little point in a cash ISA, and many are predicting its death. Investing offers the opportunity for inflation-beating returns, and digital wealth managers are lowering costs and making it simple; all age groups are running out of excuses.

FAQ

Can I transfer my ISA as I get older?

Yes, you can transfer your ISA funds between providers or between different types of ISAs (e.g., from a Cash ISA to a Stocks and Shares ISA) at any age, without affecting your ISA allowance, provided you follow the transfer rules.

Can I open an ISA for someone else?

You can only open a Junior ISA for a child for whom you have parental responsibility. Adults cannot open ISAs for other adults.

Is there a maximum age limit for contributing to an ISA?

No, there is no maximum ISA age limit for contributing to a Cash ISA, Stocks and Shares ISA, or an Innovative Finance ISA. You can continue to contribute as long as you meet the ISA rules and other eligibility criteria. You can continue to contribute to a LISA until you’re 50 years old.