How much can I save in an ISA? And other essential ISA rules

Interested in ISAs as a way to save money? Here are answers to some frequently asked questions…

“If you’ve got any savings, or investments, you should have an ISA – it’s as simple as that. The reason? You pay less tax (or no tax in the case of cash savings) and therefore increase your returns. It’s a no-brainer!” So says’s Martin Lewis*, a financial whizz who knows just about everything there is to know about making the most of your money.

So, how much can you save? Do you need a lump sum? How many ISAs can you have? What’s the ISA limit? Read on for answers to some common ISA queries…

Q: How much can I save?

Every tax year (which runs from April to April), you get an annual ISA allowance and this is the maximum that you can save or invest in these accounts during that year. This allowance isn’t rolled over if you don’t use it, but you get a new allowance with the next tax year.

For the 2020-2021 tax year (which runs up to 5 April 2021), the annual ISA allowance is £20,000 and you can choose whether to invest the whole amount into a Stocks and Shares ISA or a Cash ISA – or whether to save into both types of ISA.

Q: What’s the main difference between Cash ISAs and Stocks and Shares ISAs?

In a nutshell, Cash ISAs have no investment risk and are more like an ordinary savings account, except unlike a savings account you don’t pay any tax on your interest. Stocks and Shares ISAs on the other hand provide an opportunity for better returns by investing your savings in different asset types such as stocks and shares. They are more suitable for long-term savings of five years or more and, depending on the performance of the Stock Market and any other asset types your money may be invested in, the value of your investments can fall as well as rise.

Q: What’s the difference between ISAs and NISAs?

There’s no difference at all – they were originally called ISAs, and when the government changed some of the ISA rules in the 2014 Budget, they called them the New ISAs, or NISAs. Providers use either name now.

Q: Do I need a lump sum to invest in an ISA?

No. You can open a cash ISA with just £1. With Stocks and Shares ISAs different providers have their own minimum requirements.

For example, Foresters Friendly Society’s Stocks and Shares ISA allows you to choose whether you invest regular amounts from £50 per month, or lump sums which requires a minimum £500 to open the ISA and then top-ups of at least £250.

Q: How many ISAs can you have?

Every UK resident can put money into one Cash ISA and one Stocks and Shares ISA in each tax year. The ISAs don’t have to be with the same provider, and you can transfer either or both ISAs to another provider at any time, but you can’t take out two Cash ISAs or two Stocks and Shares ISAs in the same tax year.

Q: How old do you need to be to open an ISA?

You have to be aged 16 or over to open a Cash ISA, or aged 18 or over to open a Stocks and Shares ISA.

Q: How easy is it to transfer money from one ISA to another?

You can transfer funds held in an ISA from one provider to another as long as they accept transfers – not all of them do, so make sure to check (Foresters Friendly Society does, and will arrange the transfer process for you). Money held in a Cash ISA can be transferred into another Cash ISA or into a Stocks and Shares ISA, and likewise, assets held in a Stocks and Shares ISA can be switched back into a Cash ISA should you wish.

The important thing is not to just withdraw the money, close the account and reinvest in another ISA – transferring is key. Withdrawing rather than transferring will mean you lose the tax-free advantages of saving in that way, and if you have several years’ worth of ISA savings in cash (i.e. more than £20,000), you can’t automatically put it all into a new ISA, unless you transfer the account itself.

Q: How do I get money out?

You can withdraw money much as you would with any other savings or investment plan, bearing in mind that as with savings accounts, different ISAs have different rules.

For example, you can withdraw money at any time from an instant access Cash ISA, but you may pay a penalty if you withdraw cash from a fixed rate or regular savings Cash ISA within a set period.

Some Stocks and Shares ISAs may set a minimum amount for withdrawals, although, as with Cash ISAs, you will always benefit from the tax advantages whenever you decide to withdraw your money.

So, now you’re up to speed with all the basic ISA rules, why not find out more about Cash ISAs and Stocks and Shares ISAs.

Please Note:

A Stocks and Shares ISA is intended to be a longer-term investment, which can potentially yield better returns than a Cash ISA. The Stocks & Shares ISA is available to anyone over 18 years old. You should be aware that you may not get back what you pay into a Stocks & Shares ISA dependent on the investment term and investment conditions on withdrawal.

Tax rules may change and depend on individual circumstances.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.


* Martin Lewis – MoneySavingExpert – Full ISA guide

We think Martin Lewis is great, but he does not endorse any Foresters products.