
Are you making the most of your savings? ISAs, or Individual Savings Accounts, can be endlessly beneficial, as they allow you to hold savings in various forms without worrying about tax. That’s even on interest or capital gains!
There may come a time, of course, when you have a significant amount of cash you’d like to put in your ISA. You’re probably thinking to yourself “Can I put £20000 in an ISA every year? Is that allowed by the rules?”
The short answer is, yes, you can put £20000 in an ISA each tax year! A tax year starts on April 6th and runs till April 5th of the following year.
However, if you’re just getting started with ISAs, they can be a little confusing, especially regarding caps on how much you’re allowed to save. As it turns out, yes – there are yearly caps – and I’ll take you through what you need to know in this guide.
For example, what is the current ISA allowance, how does it work, and can you have multiple ISAs running at once? Let’s find out.
What’s the yearly limit for ISA deposits?
The yearly limit for ISA deposits depends on the tax year in question. At present, you’re allowed to invest up to £20000 during a 12-month period – this is the limit for the entire year.
The tax year runs from April 6th to April 5th each year – remember this whenever you read terms relating to ‘tax years’ rather than ‘calendar years’ (which run from January to December, as you’d expect).
This is subject to change with governmental and taxation guidance, so always check the limits with your bank.
That said, you do not have to invest the full £20,000 unless you can – it is the limit; it does not have to be the goal. You can spread the investments out over the tax year if you wish. You can invest any amount you want each time, as long as the sum total in the ISA does not surpass £20,000.
That also goes for different ISA types, too. Your ISA investments may take the shape of stocks and shares, cash outright, innovative finance, etc. But, you cannot invest £20000 in each.
The £20,000 threshold covers all ISA investments for the year – so make sure you’re keeping track.
By the way, did you know that if you contributed £20,000 a year and invested it in the market to generate 8% a year, you could become a millionaire in just 21 years! That’s not too far away when you think about it. If you’re in your early-30s, you could be a millionaire well before 55. Not bad at all!

You can try out my UK millionaire calculator with different assumptions to see how fast you can become a millionaire based on your savings rate and growth assumptions.

Can I pay into an ISA every year?
Feel free to invest in an ISA each tax year if you want to! However, you must ensure your investments stay below the £20000 threshold. If you want to invest more, you’ll have to wait until April 6th to start saving again.
And, yes – there are rules on how many ISAs you can pay into, too – keep reading and I’ll break this down further.
What if I have multiple ISAs?
While you can legally hold multiple ISAs, it is important to follow the rules and regulations of each account you set up. You’re not legally allowed to pay into two ISAs of the same type in a single tax year.
As mentioned, there are indeed multiple types of ISAs, including cash, lifetime, stocks and shares, and innovative finance (peer to peer). You can pay into each one of these ISAs every tax year.
So, consider the £20000 allowance. If you have £20k to invest and want to diversify your returns, you could split this between a stocks account, an IF account, and a basic ISA.
For example, you could invest £10,000 in your basic ISA, £2,000 in IF, and £8,000 in your stocks account. You just can’t double up on any of these types and can’t invest more money until April 6th rolls around again.
You can open a new account of any type and pay in once the tax year resets (for example, if you’d like another IF account). However, you’re then not allowed to pay into the IF account you invested in for the year prior for another 12 months.
Tricky stuff – but worth knowing!

What happens if I put more than £20,000 in my ISA?
If you deposit more than £20,000 into your ISA in a tax year, the excess amount will not receive the tax benefits and will be subject to income tax. In addition, you may be subject to penalties or fines if you intentionally exceed your ISA limit.
If you’re an aggressive saver, remember that you can easily trip the £20k annual limit even if you’re just saving £2000 per month! So watch those deposits carefully.
Just to reiterate an important point: the £20000 ISA limit is a cumulative limit,. It means that you can deposit money into the different types of ISAs (Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs, and Innovative Finance ISAs) as long as the total amount deposited across all your ISAs does not exceed the annual allowance.
If you have overpaid into your ISA, there are steps you can take to correct the situation:
- Contact your ISA provider: The first step is to contact your ISA provider and inform them of the overpayment. They will be able to advise you on how to proceed and what options are available to you.
- Contact HMRC: Upon discovering an overpayment in your ISA, it’s also important to notify HM Revenue & Customs of the error. You can contact their ISA helpline at 0300 200 3300 between the hours of 9am to 6pm, Monday to Friday, to report the overpayment.
- Withdraw the excess amount: If you have overpaid into your ISA in the current tax year, you can withdraw the excess amount without any penalty or charge. However, if you have overpaid in a previous tax year, you may be subject to penalties or charges. Your ISA provider will be able to provide you with more information on this.
- Transfer the excess amount to another ISA: If you have overpaid into one type of ISA, but have not reached the annual limit for all types of ISAs, you may be able to transfer the excess amount to another type of ISA. However, you should check with your ISA provider to see if this is possible and if any fees or charges may apply.
- Seek professional advice: If you are unsure about what to do or if you have overpaid by a significant amount, you may want to consider seeking professional advice from a financial advisor or tax specialist. They can help you navigate the complex rules around ISAs and ensure that you take the correct steps to correct the situation.
Other ISA rules you need to be aware of
While it is crucial you’re aware of and fully understand the ISA allowance, there are other ISA rules that will also impact you while you save and grow your cash.
For example, there are age restrictions on different ISAs – as it stands in the UK, anyone 16 or over can open up their own cash ISA. However, to open a stocks and shares ISA, or an innovative finance ISA, you must be at least 18.
Another important point to note is that two people cannot open an ISA together – each ISA can only belong to one individual. That said, this can be beneficial, even for couples who want to run their accounts together.
Under these rules, each person can have their own ISA allowance, which technically allows you to invest more together, even if it is in separate accounts. In a two-person household, for example, you can effectively invest a total of £40,000 between you, providing it’s £20000 each and under individual names.
And, speaking of partners, you cannot open an ISA for anyone else other than yourself. The person opening the ISA must be the account holder – you can’t set up savings accounts for anyone else. A major exception to this rule is if it is an adult opening a junior ISA for a child of at least 16 years of age.
If you’re considering getting into stocks and shares ISAs this next tax year, look at our complete guide for beginners.
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Want to Learn More About ISAs?
We’ve covered ISAs in great depth here on PFF and hopefully these articles help you navigate the complicated world of finance and taxes! Here are the list of articles to help you learn more:
- Best Stocks and Shares ISA for Beginners
- Junior Cash ISA vs Junior Stocks and Shares ISA
- Lifetime ISA vs Pensions
- Premium Bonds vs ISAs
- ISAs vs Savings Accounts
If you’re ready to open up an ISA, some of our favourite providers include Plum, InvestEngine and Moneyfarm. There are many more providers, so if you want to dive in and learn more, you can explore the wide list of ISA providers that we have covered in depth here on the blog.
FAQs
Do ISA transfers affect my yearly allowance?
Transferring between ISAs shouldn’t harm your yearly allowance. There is a process to follow if you want to transfer any money from one ISA to another, and as it’s not ‘fresh’ funds, the money likely won’t face limitations.
This process ensures that the transfer will not affect your current yearly allowance and will not count as part of the limit for the year.
Handily, if you want to move money around, all you usually need to do is fill out and send in a transfer form to your new provider. While some may charge you for withdrawing the money or even leaving the provider, it should only be a small fee.
Remember, your new ISA provider must provide the sole account of that type you wish to use for the remainder of the tax year.
What is a flexible ISA?
A flexible ISA allows you to withdraw and pay money back within the same tax year in line with your allowance. It will not count as you going over the £20,000 limit as long as you pay the exact same amount that you took out.
On a standard ISA, if you withdraw money, it cannot then be returned before the end of the tax year. For example, if you reach your £20,000 limit and then decide you need to take out £3,000, you will not then be able to pay that £3,000 back in before April 5th the next year.
It is important to check with your bank if you have a flexible or non-flexible ISA to ensure you are always within UK regulations before withdrawing or paying back any money.