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ISA allowance: Can I put £20000 in an ISA every year?

If there is ever a time to get your investments in order, it’s the beginning of the new tax year. With annual allowances pre-set, it is the opportunity for investors to evaluate their plans for the coming year, where their money sits, and how they should contribute in order to make the most of it and take whatever tax benefits are on offer.

It is also the time to consider how much of your £20,000 annual ISA allowance to use in your individual savings accounts (ISAs) – for a full breakdown of how ISA limits work, read our guide.

You can, for example, spread your annual ISA allowance across a mixture of different ISA types or portfolios. So, read on to find out all you need to know about how to invest your £20,000 allowance tax-free. Alternatively, get in touch, and we can talk you through your options.

The most important ISA rule to remember?You can only invest the total ISA allowance into one of each type of ISA in the same tax year
Can I put 20000 in an ISA every year?Yes, you can
Five reasons why you should use your ISA allowance• Tax reliefs and exemptions
• Minimal amount needed to open and maintain an account
• Give your savings the chance to grow
• Withdrawal flexibility
• Transfers
How many cash ISAs can I have?


You can have as many as you want

How does the ISA annual allowance work in practice?

An individual savings account (ISA) is a tax-free savings account that allows you to invest or save money in the UK. You can set aside money in an ISA each tax year without having to pay tax on your returns. But you can only put a set amount into an ISA each year.

The tax season starts on the 6th of April and ends on the 5th of April the following year, and the total ISA allowance for 2023-24 is £20,000. It’s the same ISA allowance as 2022-23; in fact, not only was the ISA limit for 2022 still £20,000, the £20K cap has remained unaltered since the 2017-18 tax year. Hopes were high that the cap would be raised this year, but in his Spring Budget, Chancellor Jeremey Hunt confirmed there would be no change in 2023/24.

So, the long and short of it is that you can put a maximum of £20,000 into an ISA account without paying taxes. Any unused ISA allowance is not carried over into the next tax year’s allowance. Once a new tax year starts (which is always on the 6th of April), you will be given a new ISA allowance which can change according to new government regulations.

For the avoidance of doubt, if you’re asking yourself, “Can I have more than £20K in an ISA,” the answer is yes, you can. You can accumulate as much as you like, but the tax-free annual contribution is £20,000 ISA allowance.

There are four main types of ISA accounts. They include cash ISAs, lifetime ISAs, innovative finance ISAs, and stocks and shares ISAs. One of the ISA rules is that you can only invest the total ISA allowance into one of each type of ISA in the same tax year. Here are examples of how you can spread your ISA allowance across the various types of ISAs.

  • You can invest £12,000 in a stocks and shares ISA in a tax year, plus £7,000 in a cash ISA, and £1,000 in a lifetime ISA.
  • You can invest £10,000 in a cash ISA, £5,000 in a stocks and shares ISA, £2,000 in a lifetime ISA and £3,000 in an innovative finance ISA.

There is also a Junior ISA (JISA), but any money invested in these is not yours. This type of ISA account is for a child. Because it’s not your money but the child’s, it does not affect your annual ISA allowance. There are two types of Junior ISAs; cash or stocks and shares.

While the annual allowances might change depending on the type of ISA, all ISAs offer the same tax benefits.

All ISAs carry a degree of risk. The least risk is associated with cash ISAs. The riskiest of all are innovative finance ISAs which are associated with crowdfunding and peer-to-peer lending. Also, innovative finance ISAs are not protected by the FSCS (Financial Services Compensation Scheme).

What are the different types of ISA allowance?

When we talk about investing in an individual savings account, we generally mean stocks and shares ISAs. However, if you are wondering, ‘Can I put 20000 in an ISA every year?’ the answer is yes, but the different types of ISAs come with different ISA allowance rules. The most common types of ISA are Cash ISAs, Junior ISAs and Lifetime ISAs.

The Cash ISA allowance is the same as a stocks and shares ISA in any given tax year – £20,000. The only real difference with a Cash ISA is the assets you’re investing in.

The Junior ISA allowance, or JISA allowance, is £9,000 per tax year for 2023/24, unchanged from the previous year. For Junior ISAs, a parent or guardian can invest in either a cash Junior ISA or a stocks and shares Junior ISA and can only be accessed once the child turns 18 (though they can manage the account from 16 onwards). At age 16, the child can open an adult Cash ISA alongside the Junior ISA and save an additional £20,000.

The lifetime ISA allowance for 2023-24 is a little more complicated. You can only put in £4,000 per year into lifetime ISAs and must contribute at least once before turning 40. Also, you can only contribute to the ISA until you’re 50. With these conditions being met, the government will add a 25% bonus to your pot, up to £1,000 per year. Contributions into lifetime ISAs are also used for first-time property purchases.

The stocks and shares ISA may be the best option for an ISA wrapper for people looking to invest a substantial amount in a tax-free manner. However, if you want to use all of your ISA allowance for 2023-24, or even just part of it, we recommend doing some thorough research in order to get precisely what you’re saving for before you start.

Use as much as possible

With any type of ISA, the first point to make is straightforward: utilise as much of your annual ISA allowance as you can afford. Of course, this doesn’t mean that you have to put £20,000 into your ISA account every year; very few people can afford to do that. What it does mean, however, is that you could better utilise any money you come by, by saving or investing in one of the types of ISAs.

So long as you’ve paid off any existing, expensive debt and saved enough as a rainy-day or emergency fund, utilising as much of your allowance as possible is highly recommended. ISA allowances operate on a ‘use it or lose it’ basis, so any unused annual allowance from the previous tax year can’t be rolled over.

There is also a question about when you should invest. The answer, almost always, is “now”. We’ve written a few times about the pitfalls of trying to time the market or holding off on investing for whatever reason. In almost all cases, it’s more beneficial for savers to invest as early as possible and avoid missing out on the historic ‘boom days’ that can supposedly make all the difference to long-term returns.

Consider multiple portfolios

Understanding how ISAs work is just as important as asking the question, “Can I put £20, 000 in an ISA every year?” For example, you can’t invest in two different stocks and shares ISAs. However, Moneyfarm ISAs will allow you to create multiple portfolios within one single ISA account. In effect, this means you have one ISA account, but it’s diversified across several portfolios.

There are a few reasons why you might want to do this, but the most common is as a means of gradually introducing your money into the financial markets through drip-feeding rather than investing one large lump sum, thereby enabling you to react to current trends.

For example, if you have an ISA with a medium-high-risk portfolio that you use for your long-term investing, but your tolerance to risk has been pushed near its limit by changing economic circumstances, you might be wary about adding more funds. Instead, you can open or start transferring money into a low-risk portfolio within the same existing ISA.

But if you’re introducing new money and moving existing money around between portfolios, you need to keep a clear record of how much of your £20,000 allowance you’ve used and perhaps plan ahead with your investment consultant.

By keeping your savings within your ISA portfolio, it enables you to leverage the tax benefits of your £20,000 ISA allowance for 2023-24 without committing all your money to a higher-risk portfolio.

Opening a second portfolio within the same ISA is simple. With a Moneyfarm account, all you need to do is follow the online portfolio creation process again or simply get in touch with a member of our investment consultancy team to get one set up.

Compound interest – Albert Einstein’s 8th wonder of the world?

Because the interest that is applied to all types of ISAs is compound interest, it means that your savings can grow at an accumulative rate. Whether or not it is true, it is often said that when Albert Einstein was asked what he considered man’s best invention, he replied it was “compound interest“, and it is even claimed that he said it was the 8th wonder of the world.

If you can maximise, make the most of your annual ISA allowance and tuck £20,000 away every year, you could even end up becoming an ISA millionaire.

The best way to explain compound interest is that it facilitates making interest on interest. Each year, the interest is added to the value of the fund, and this increased total then has interest applied and so forth, year on year. If you could afford to invest £20K each year, and it was compounded by 5% per annum, you could reach millionaire status in 25 years.

If interest is applied at 7%, that 25 years drops to 21. Given that medium-risk ISAs have returned an average of 9.4%, according to the Nuts About Money, that could be achievable if you can afford to maximise your contributions.

Remember the basics

When using your ISA allowance, the final thing to remember is not to lose sight of the basics. The run-up to the end of the tax year is a big time for financial providers, who will often offer promotions and discounts to encourage people to invest. These are well worth considering, but it’s crucial not to divert from these fundamentals:

Think long-term. Even in times of relative uncertainty, a long-term investment strategy is still valid. Disinvesting, moving money between risk levels or trying to time the market can be tempting, but sticking with the plan is the way to reach your long-term goals. Of course, markets will rise and fall in the short term, but the trajectory looks a lot smoother over a long enough timeline, especially with stocks and shares ISAs.

Diversification. When deciding how to use your allowance, try to avoid being swayed by the news of certain stocks or markets going through the roof. Betting on the success of a limited pool of assets is inherently risky, so investors should remember to keep diversification as a central pillar of their strategies. At Moneyfarm, we invest across asset types and geographies, using carefully created ETFs to provide all the protection in diversity that our clients need.

Get advice. The run-up to the end of the tax year also represents an ideal opportunity to seek advice from your investment consultant. If your ISA provider, like Moneyfarm, offers consultancy at no extra cost, it’s worth checking in to see how your investments are doing and discussing your options going forward. Semi-regular check-ups like these mean that you’re always in the loop.

Five reasons why you should use your ISA allowance

  1. Tax reliefs and exemptions

Investors who hold their investments in an ISA get a tax break. You can invest your money in an ISA without paying income tax or capital gains tax. In addition, you don’t pay taxes on the dividends you receive from investments held in an ISA.

  1. Minimal amount needed to open and maintain an account

You don’t need thousands of pounds to start investing in an ISA. But there is a limit to how much you can put in an ISA each year. The ISA allowance for 2023/24 limit for the tax year is £20,000.

  1. Give your savings the chance to grow

Along with the tax benefits, ISAs also give your savings a great chance to grow over the long term. Taking into account factors like compound interest and active portfolio management, an ISA becomes a very attractive place for your wealth to be. Of course, investments can go down as well as up, and you may get back less than you put in, but it’s worth exploring your options if you want to protect and grow your wealth long-term.

  1. Withdrawal flexibility

ISAs are becoming more flexible. For example, you can now withdraw and replace cash into a cash ISA account in the same tax year without affecting your annual allowances. However, not all ISA providers offer such flexibility, so you ask about it before you open an account.

  1. ISA transfers

ISA transfers are possible and straightforward. There are several reasons why people transfer: you might want to switch providers due to better interest rates, consolidate all your accounts or transfer your cash ISA into a Stocks and Shares ISA. It would be best to be mindful when switching providers. Before transferring your ISA, check what charges, exit penalties, and benefits you might lose. It might be a good idea to seek professional advice.


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

Yes, you can put £20K into an ISA each year as the annual ISA allowance for 2023-24 is £20,000. Also, you can distribute the ISA allowance across the different types of ISA accounts.

Can I add to my Cash ISA every year?

Yes, you can add money to your Cash ISA every year, as long as the total amount does not exceed the ISA allowance for 2023 24 of £20,000. If you contribute to more than one type of ISA during the same tax year, this total amount of £20,000 must be split and shared across the ISA accounts.

How often can you add to an ISA?

You can contribute to an ISA as many times as you like this tax year, providing your overall contribution during the tax year does not exceed the ISA allowance for 2023-24, which is £20,000.

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*Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.