ISA limits 2025 – what you need to know

If you’ve ever wondered how much of your money can grow without paying tax, the answer lies in the ISA allowance. An ISA (Individual Savings Account) is a government‑backed wrapper that lets you earn interest, dividends, or capital gains tax‑free. The allowance changes each tax year, and keeping up with the latest figures can save you a lot of money. Below we break down the numbers for the 2024/25 tax year, explain the different ISA types, and give you simple ways to get the most out of your allowance.

Current allowance for the 2024/25 tax year

For the 2024/25 tax year the total ISA allowance is £20,000. You can split that £20,000 across cash ISAs, stocks & shares ISAs, innovative finance ISAs, and Lifetime ISAs, but you can’t exceed £20,000 in total. The cash ISA limit stays at £20,000 if you use only cash, while a stocks & shares ISA can also hold the full £20,000. The Lifetime ISA (LISA) is a bit different – you can put in up to £4,000 a year, and the government adds a 25% bonus, but the LISA contribution counts toward the overall £20,000 cap. If you’ve already used part of your allowance in a previous account, you can’t add more than the remaining amount in the new one.

How to make the most of your ISA allowance

First, decide which ISA type matches your goals. If you need easy access and low risk, a cash ISA is straightforward. For long‑term growth, a stocks & shares ISA often beats cash because the market can outpace inflation. A LISA works well if you’re saving for a first home or retirement, thanks to the government boost. Second, don’t wait for the tax year to end – you can fund your ISA any time, and the allowance resets on April 6. Third, consider spreading contributions throughout the year rather than lump‑summing, especially if you’re using a stocks & shares ISA – it can smooth out market volatility. Finally, keep an eye on your total contributions across all accounts; once you hit the £20,000 limit, any extra money will lose the tax‑free benefit.

Another practical tip is to use an “ISA rollover” if you have existing ISAs from previous years. You can transfer funds from an older ISA into a new one without losing the tax shelter, but make sure you follow the proper transfer process – pulling the money out yourself breaks the tax‑free status. Most providers offer online transfers that are quick and free. Also, if you’re close to the limit, think about using a flexible ISA. Flexibility lets you withdraw money and replace it later in the same tax year without it counting as a new contribution.

In short, the 2025 ISA limits give you a decent amount of room to grow your savings without tax. By picking the right mix of cash, stocks, and possibly a Lifetime ISA, and by contributing regularly, you can squeeze every penny out of the allowance. Keep track of your contributions, use transfers wisely, and remember the deadline each April. With these simple steps, you’ll be on the right track to a tax‑efficient nest egg.