News & Views

Get the most out of your ISA Allowances

28th June 2023

In the last of our series of how the changes to financial regulations can affect you, we look Individual Savings Accounts (ISAs).



In this current tax year, the total amount you can save into ISAs is £20,000. This is known as the ISA Allowance. ISAs are also sometimes known as tax “wrappers”, because the money you hold in them is sheltered from both Income Tax and Capital Gains Tax.

So how do you decide on the best ISA for you? In this article we answer the questions that we get asked the most.


 What is a Cash ISA?

Cash ISAs are savings accounts that pay interest free of Income Tax.

With a Cash ISA:

  • You’ll earn tax-free interest on your savings.
  • You can only open one Cash ISA a year, but it is possible to transfer to another Cash ISA or a Stocks and Shares ISA with another provider during the tax year.
  • If you withdraw money from your Cash ISA, you don’t reset your annual limit unless you have Flexible ISA (see below). For example, say in one year you saved up to the Cash ISA limit and withdrew £1,000. You can’t top up that £1,000 immediately – you’ll need to wait for the next tax year.


What about a stocks and shares ISA?

A stocks and shares ISA could be for you if:

  • You are happy to put your money into investments funds for long term savings with tax free growth.
  • You aren’t looking for immediate access to your money and are prepared to keep your money invested for a number of years, you haven’t used up your total ISA allowance for the current tax year.
  • You’re comfortable with the fact that the value of your investments can go both up and down and that you might get back less than you invested.


What investments are held in stocks and shares ISAs?

A stocks and shares ISA is effectively a ’tax wrapper’ that can be put around a wide range of different investment products. Any investment growth or interest earned within a Stocks and shares ISA is tax-free.

Lots of different types of investment can be held in an ISA, including:

  • Unit trusts
  • Investment trusts
  • Exchange-traded funds
  • Individual stocks and shares
  • Corporate and government bonds
  • OEICs (Open Ended Investment Companies)


How stocks and shares ISAs work

You can pay a total of £20,000 a year into an ISA in the 2023-24 tax year.

  • You can divide your ISA allowance across the four different types of ISAs: cash, stocks and shares, innovative finance or lifetime. Although the maximum you can put into a lifetime ISA is £4,000 each tax year.
  • You can’t put money into the same type of ISA in the same tax year, for example, two stocks and shares ISAs – you’d need to wait until the next tax year to put money into the second stocks and shares ISA.
  • Your annual ISA allowance expires at the end of the tax year (5 April) and any unused allowance will be lost. It can’t be rolled over to the following year.
  • You can make a lump sum investment and/or regular or ad hoc contributions throughout the tax year.
  • Any increase in value of the investments in your stocks and shares ISA is free of Capital Gains Tax.
  • Most income from your stocks and shares ISA is tax-free.
  • You can only pay into one stocks and shares ISA in each tax year, but you can open a new ISA with a different provider each year if you want to. You don’t have to use the same provider for your cash ISA if you have one.


ISA rules on deceased spouse ISA transfers

ISA rules introduced in April 2015 mean that if your husband, wife or civil partner dies you can inherit their ISA. You will receive an additional ISA allowance equal to the value of the deceased’s ISA savings at the time of death.


Transferring ISAs
  • If you wish to switch your current or previous year’s ISA to a different provider’s ISA while simultaneously keeping future tax benefits intact, you have to arrange for a transfer rather than selling and reinvesting. If you do simply close one ISA and open another rather than transferring between the two, you lose the tax advantages.
  • All ISA providers have to allow transfers out, but they don’t have to allow transfers in.
  • You can transfer money from a cash ISA to a stocks and shares ISA,and vice versa (money in a stocks and shares ISA can be transferred into cash).
  • If you transfer an ISA that you have paid into during the current tax year to a new provider, you must transfer the whole balance. For ISAs from previous years, you can choose how much to transfer.


Access to your money
  • You can sell the assets held in your ISA at any time and there’s no minimum length of time you need to hold it.
  • If you do cash in some or all of your ISA, you can only reinvest this money into another ISA to the extent that you have unused available ISA allowances.


Read all four articles

That concludes our summary of the recent changes to the financial regulations and how they can affect you. Here’s the links to all four:



* The value of an investment may go down as well as up, and you may get back less than you originally invested.


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