ISA Allowance 2024/25
£20,000 tax-free — how to use it, how to split it, what the LISA adds on top.
The headline rules
- £20,000 total across all ISAs per tax year (6 April – 5 April).
- Unused allowance does not carry over.
- From April 2024: you can contribute to multiple ISAs of the same type in a single tax year (previously banned).
- Partial transfers between ISA providers are permitted.
Lifetime ISA — £4,000 + 25% bonus
If you're 18–39, £4,000 of your £20,000 ISA allowance can go into a Lifetime ISA, which earns a 25% government bonus (up to £1,000/year). Bonus is paid monthly. Withdrawals are tax-free for a first home purchase (property ≤ £450,000) or after age 60. Other withdrawals incur a 25% penalty — which wipes out the bonus and a small portion of your own contribution.
Cash vs Stocks & Shares — which to pick
Horizon is the deciding factor. Money needed within 3–5 years should stay in a Cash ISA (or outside any ISA) — short-term market volatility can dwarf the tax saving. Money with a 5+ year horizon belongs in a Stocks & Shares ISA where the long-term expected return and the accumulated CGT/dividend tax shelter outweigh the volatility.
Use every year — don't wait until March
The ISA allowance is use-it-or-lose-it each tax year. Maxing the allowance on day 1 of the tax year (6 April) rather than day 365 captures almost a full extra year of tax-sheltered returns. Over a 30-year investing career that's a meaningful compounding advantage.