Here’s how many Brits actually hit the £20,000 ISA limit
Data published by the government shows that millions of people use ISA’s to save money every month – but surprisingly few hit the £20,000 tax-free limit each year.
An ISA is a type of savings account that lets you save or invest your money without paying income tax or capital gains tax on any returns.
In any tax year, you can invest up to £20,000 in your ISA tax-free. You can divide your annual allowance across different types of ISAs, but you cannot go over the £20,000 a year limit:
- Cash ISA
- Stocks and shares ISAs
- Innovative finance ISAs
- Lifetime ISAs
Answering in a written parliamentary Q&A, MP Lucy Rigby noted thatin the 2022 to 2023 tax year, 7.12 million people subscribed to a Cash ISA only, and 3.07 million people subscribed to a Stocks and Shares ISA only.
1.46 million individuals subscribed the full £20,000 to Cash ISAs, while 0.84 million individuals subscribed the maximum £20,000 to Stocks and Shares ISAs.
In 2022 to 2023, there were 0.74 million people who subscribed to both Cash and S&S ISAs, and 0.19 million of these dual‑subscribers subscribed the maximum £20,000.
Changes on the cards
Chancellor Rachel Reeves has confirmed that she will be making changes to the UK’s ISA system from 2027.
Presenting her Budget in parliament on at the end of November, the Chancellor said that she plans to keep the £20,000 ISA allowance – but designate £8,000 of that for an ISA with stocks and shares. This effectively limits Cash ISAs to annual investments of £12,000.
effectively limits Cash ISAs to annual investments of £12,000.
“From April 2027, I will reform our Isa system, keeping the full £20,000 allowance while designating £8,000 of it exclusively for investment, with over-65s retaining the full cash allowance,” she said.
“And thanks to our changes to financial advice and guidance, banks will be able to guide savers to better choices for their hard-earned money. Over 50% of the ISA market – including Hargreaves Lansdown, HSBC, Lloyds, Vanguard and Barclays – have signed up to launch new online hubs to help people invest here in Britain.”
While the move will be welcomed by some as a way to get more people actively investing in UK companies, others have criticised the Chancellor for making the system too complicated.
