What is an ISA Year?
In the UK, the ISA year runs from April 6th of one year, to April 5th of the following year. For 2024/25 (and the same for 2025/26), savers are entitled to save up to £20,000 into ISA accounts (up to £9,000 for Junior ISAs) between these dates.*
One of the most common questions asked by people first attempting to understand ISAs is – do you pay tax on ISA interest? The answer is no - an ISA (Individual Savings Account) is a type of savings account which allows you to save money, tax free.
Your ability to save tax free into an ISA is however limited by your annual ISA allowance. This amount is set by the UK government and is the maximum amount that can be saved and invested during a tax year. Your allowance refreshes each year, allowing you to save or invest further funds. The tax year is sometimes referred to by savers as an ‘ISA year’.
How Does the ISA Year Affect Your Savings?
With your ISA allowance governed by years, it is important to make the most of each year’s allowance by future planning.
Once you reach the end of the ISA year, you can still add funds to the account, but they would count towards your new year’s annual allowance. Any remaining allowance from the year that had just ended would simply remain unused.
An example of how this could apply:
You know that you’ll be saving £40,000 over the next two ISA years. At the end of the first year, you’ve placed £10,000 into ISA accounts. You have not used up your £20,000 allowance for that year, and you still have £30,000 in savings waiting to be placed into an ISA.
Your allowance for the next year would still be £20,000, even though you hadn’t used up your previous year’s allowance. You could therefore save £20,000 into ISAs in year 2 but you would have £10,000 remaining that would have to wait a further year for the next ISA allowance (or be invested/saved in other ways).
If you had been able to, you could have placed £20,000 into ISAs in year one, and £20,000 into ISAs in year two, making full use of the two years’ tax-free savings allowance.
What Are The Limits? i.e. How Many ISAs Can I Have?
You can open multiple ISA accounts with different providers, all in the same ISA year, providing you remain within your annual ISA allowance.
There are currently four types of ISA available in the UK, all with their own terms and conditions, that are worth exploring to find the best type of ISA for you. Some allow instant access to your savings, some may have fixed or variable interest rates, some have guaranteed returns while others rely on the value of stocks and shares. The four types of ISA are: Cash ISA, Stocks & Shares ISA, Lifetime ISA, Innovative Finance ISA. You can choose to divide up your savings across these different types of ISA, or place your savings into just one ISA. Lifetime ISAs are the exception in that you can only open one of these in each ISA year and the maximum that you can deposit is £4,000 each tax year.
At The Cumberland, we offer Cash ISAs in the form of an Instant Cash ISA, a Junior Isa, and 1, 2 or 5 year Fixed-Rate ISAs. You are only able to open one Cash ISA with The Cumberland per ISA year, however you are entitled to open other Cash ISAs (or different types of ISA) with different providers, in the same year, providing you remain within the annual ISA allowance.
A more detailed description of ISA rules and the different types of ISA can be found on the government website.
What Are the Key Dates and Deadlines for the ISA Year?
Knowing the dates of the ISA year is important as once the year ends, you can no longer subscribe into that year’s ISA.
For example, if you have £19,000 saved into ISA accounts in the 2024/25 ISA year, April 5th 2025 is the last date at which you can top that up to £20,000.
Once it becomes April 6th 2025 you are in a new year for ISAs and your 2024/25 ISA is closed to additional funds. You would then subscribe into your 2025/26 ISAs and begin using up your new allowance.
Dates to remember:
April 5th – the final day of the ISA year for contributions to be paid in to that year’s ISAs.
April 6th – the start of the new ISA year.
How To Maximise Your ISA Allowance: Some Ideas To Get You Started
Saving habits
With saving, wherever you are placing the money, whether it’s within an ISA account, or a different type of savings account, developing a savings habit can really help. Once you get used to putting a certain amount of money aside each week or month, you may also get used to not having it in your spending pot. One way of doing this is by setting up a regular payment from your current account into your savings account.
ISA rates and other factors
You should be aware that different types of Cash ISAs and different ISA providers will offer different interest rates and that these are subject to change over time. To maximise the return on your savings, you’ll want to compare the accounts that are available and keep track of changing interest rates. Keep in mind that the best Cash ISA rates are only one factor. You might wish to evaluate the providers themselves, and the terms and conditions associated with each account.
Your individual preference
Maximising your ISA allowance might look different to one person than to another. You should consider the best option for you. For example, the account with the best Cash ISA rate might suit a person with low-risk appetite, but the best Stocks & Shares ISA might be preferable to another due to the possibility of higher returns. A third person might prefer to split their savings across both types of ISA.
You can view further information in our savings section about the range of ISA products that are offered by The Cumberland.
If you require help with understanding your options, you can make an appointment with our team either in branch or over the phone and they will be happy to discuss the ISA options that we have available.
For more information about saving, include help with budgeting, visit our savings hub.
ISA Year FAQs
Yes you can open multiple ISAs in one year providing your savings within those ISAs remains within your ISA annual allowance.
At The Cumberland you can only open one Cash ISA per ISA year, however you can open additional ISAs with other providers.
Once April 5th has passed you can no longer contribute to that year’s ISA and any allowance which you have not used up cannot be transferred, it simply remains unused.
You will not receive tax-relief for anything over your annual allowance.
HMRC assess ISA accounts at the end of each ISA year and will contact you if they find a discrepancy. However, if you know in advance that you have exceeded your allowance, you should call HMRC’s ISA helpline on 0300 200 3300. They will assist you with how to rectify the problem.
The ISA year runs from 6th April of one year to the 5th April of the next. Those are the dates in which you can contribute to that year’s ISA and make use of its allowance.
Yes you are able to transfer an ISA to another provider during the ISA year. You should get appropriate advice on how to do this correctly so that you don’t lose your tax benefits.
At The Cumberland we will normally accept the transfer of a Cash or Stocks & Shares ISA from another ISA provider, subject to ISA regulations, into one of our Cash ISAs. We recommend you check with your existing provider whether their account has any restrictions on withdrawals to make transfers.
Please see our article on ‘How to transfer an ISA’ for more information or make an appointment to speak with us in branch or over the telephone for further help or to proceed.