What is the Investment ISA Limit?
Opening an investment ISA is a fantastic way to maximise the returns you can expect on your investments by keeping them in a tax-free wrapper. But what is the limit on how much you can put into an Investment ISA? We’ve broken down everything you need to know.
What is an investment ISA - and why should I have one?
An Investment ISA keeps your returns safe from the taxman by keeping the earnings in a tax-free wrapper. These are tax-free by design, and also known as a Stocks and Shares ISA.
An ISA is a specific way to save which gives you tax-free returns on your savings (or in this case, investments). A Stocks and Shares ISA, or an Investment ISA, is a form of ISA.
In the past few years, interest rates for Cash ISAs and Savings Accounts have been fairly poor.
However, interest rates for Stocks and Shares ISAs (or Investment ISAs) are better, which is why they are often a more attractive option - especially for those looking to get on the investment ladder.
Is there a limit to how much I can put into my Investment ISA?
Government legislation gives every adult UK citizen a yearly allowance which they are able to put into an ISA and enjoy tax-free returns.
Currently, that amount stands at £20,000 per person per year – and all the returns you make on investing some or all of your allowance will be tax free if placed into an ISA.
How many Investment ISAs can I hold?
You can hold as many Investment ISAs as you would like - however you can only open one new Investment ISA per tax year.
You are able to transfer your Investment ISA between providers should you find another account which suits your needs better - for more information on this, read our recent step-by-step blog post.
How should I spread my ISA allowance?
When using your ISA allowance, you have two options:
You can use all of your ISA allowance to pay into a Stocks and Shares ISA.
Or you can spread your allowance across the four types of ISA investment available (to all UK adult taxpayers):
- Cash ISAs
- Stocks and Shares ISAs
- Innovative Finance ISAs
- Lifetime ISAs
Any money that you put into a Junior ISA (JISA) does not count towards your yearly tax-free allowance, but there is a £9000 limit on these accounts for this tax year.