Can I Put £20000 In A ISA Every Year?
If you are looking for tax efficient ideas for investing then an ISA is a perfect place to start. Currently UK residents can put up to £20,000 in a ISA every year.
The simple answer is ‘yes’, £20,000 is what each person is permitted to contribute to Individual Savings Accounts each year.
This assumes that you are aged 16 or over and are resident in the UK for tax purposes.
If you are aged 16 or 17 you will only be permitted to contribute to cash ISAs, and from age 18 you can take out any type of ISA.
It’s important to note that the ‘ISA year’ means the ‘tax year’, which isn’t the same as the calendar year. The tax year starts on 6th April, so you can contribute £20,000 between 6th April 2020 and 5th April 2021 as your contribution for the current tax year. You will be able to contribute an additional £20,000 from 6th April 2021 onwards.
Another important thing to consider is that if you choose to put £20,000 into one ISA, then it means you can’t contribute to any other ISAs during the same tax year. The £20,000 is what you are permitted to contribute in total to these types of ISA:
- Stocks & Shares
- Innovative Finance
- Help To Buy
The annual limit on contributions to a lifetime ISA is £4,000 and for a Help To Buy ISA it is £2,400. You need to be aged between 18 and 39 to open a lifetime ISA, and you can only make contributions until age 50.
New Help To Buy ISAs are no longer available, however existing planholders can still make contributions of up to £200 per month.
These are essentially the only other restrictions on what can be contributed to ISAs. Stocks & shares, cash and innovative finance ISAs are available to all UK adults aged 18 or over and allow contributions of up to £20,000 per year.
Some examples of how you might use your £20,000 annual ISA allowance include:
You could invest £20,000 in cash, but then you cannot make any contributions to any of the other forms of ISA during the same tax year
Likewise, you could invest £20,000 in stocks & shares or innovative finance, and you cannot make any contributions to any of the other forms of ISA during the same tax year
You could contribute £10,000 to a stocks & shares ISA and £5,000 each to a cash ISA and an innovative finance ISA
If eligible, you could make full use of the £4,000 lifetime ISA allowance and then contribute £16,000 to stocks & shares, cash and/or innovative finance ISAs
The annual limit on contributions to a help to buy ISA is £2,400, so if you have an existing account, you could make full use of this allowance and then contribute £17,600 to stocks & shares, lifetime and/or innovative finance ISAs.
You can’t contribute to a help to buy ISA and a cash ISA in the same tax year, as a help to buy ISA is essentially a cash account.