ISA limit guide: everything you need to know for 2025

Ever wonder why you can’t just dump all your cash into an ISA? The answer is the ISA limit – the maximum amount the UK government lets you put into a tax‑free account each tax year. Hitting that ceiling can boost your savings, but missing it means you’ll pay tax on the extra money.

What the ISA limit is and why it matters

The ISA limit is set by HMRC and changes once a year, usually in the spring budget. For the 2024/25 tax year the limit is £20,000, which you can split across cash, stocks & shares, innovative finance or Lifetime ISAs. Whatever you choose, the money you earn inside the ISA stays free from income tax and capital gains tax.

Why does that matter? Imagine you earn 5% on a cash ISA. On £20,000 that’s £1,000 a year – tax‑free. If you kept the same £20,000 in a regular savings account and you’re a basic‑rate taxpayer, you’d lose about £200 in tax.

How to maximise your ISA allowance

First, decide which type of ISA fits your goals. A cash ISA is safe, but a stocks & shares ISA can give higher returns if you’re comfortable with market swings. You can also spread the allowance – for example, £10,000 in cash and £10,000 in stocks.

Second, don’t wait until the end of the tax year. The allowance resets on 6 April, and you can’t carry unused space forward. If you only top‑up in December, you’ll miss out on months of tax‑free growth.

Third, watch out for multiple providers. You can have several ISAs, but the total you put in across all of them can’t exceed the £20,000 limit. Keep a simple spreadsheet or use your bank’s online dashboard to track contributions.

Finally, think about the Lifetime ISA if you’re under 40. It lets you save up to £4,000 a year, and the government adds a 25% bonus – that’s £1,000 free money each year, ideal for a first home or retirement.

Remember, once you’ve hit the limit you can’t add more until the next tax year, but you can still withdraw and reinvest within the same year without losing the allowance.

Bottom line: the ISA limit is your ticket to keeping more of what you earn. Keep an eye on the annual figure, split it wisely, and start early. That way you’ll maximise the tax‑free boost and watch your savings grow faster than a race car on a straight.