Isas: six steps to take before the April allowance deadline
The maximum you can put away each tax year in any adult Isa is £20,000. That limit does not include any interest or other returns earned on your money. It covers all types of Isa you may hold: any cash, stocks and shares, innovative (containing peer-to-peer investments), lifetime or help-to-buy Isas.
Lifetime Isas have their own £4,000 annual cap within the £20,000 – if you have used it all, you will have £16,000 left. Help-to-buy Isas are no longer open to new applicants, but you can pay into an existing one until November 2029, and can put in up to £200 a month (£2,400 a year).
Junior Isas are available to under-18s and have an annual limit of £9,000.
Look at what you have put in since 6 April 2024. The difference between that and £20,000 is how much you have left to use before the end of 5 April 2025.
This will be easy if you have kept a record of your savings and investments – otherwise you will need to track down the information. Remember, you may not have paperwork for everything as so many providers now promote going paperless, so search your email inbox as well as your filing cabinet.
The quickest and easiest way to use more of your allowance is to put money into an existing account – you will not need to provide any ID to the provider. If it is an account you set up in the current tax year, it should be straightforward – unless it is a fixed-rate cash Isa, which does not allow extra payments.
If it is an Isa from a previous tax year and you have not paid into it during this one, you may need to contact your provider before you can put in new money. Although the rules have changed so that banks and building societies no longer have to insist on this, many still do. Nationwide building society, for example, asks savers to complete a renewal form before allowing new payments – this can be done in a branch, on the phone or online, and takes just a couple of minutes. You can start using the Isa again straight away.
This tax year, for the first time, you can have more than one of the same type of Isa, so even if you have paid into an account this tax year, it is still worth checking whether it is a good deal.
For cash Isas, the best-buy tables change constantly, with the top offers being determined by which providers are after your business at any particular time. Check websites such as The Private Office and Moneyfacts for up-to-date lists of the best deals.
Investment Isas offer returns based on the performance of the funds they contain, but the provider's charges will have an impact, too. Look for providers that offer access to the funds you want to put your money into, or a set portfolio of funds that appeals to you, and then compare their costs.
If you have already opened an investment Isa this year, Sarah Coles, a personal finance expert at the investment platform Hargreaves Lansdown, says there are a limited number of reasons to open a second.
Some people may have money in a stocks and shares Isa, with high exit fees that they cannot move, but want to open a second account for future investments, she says. 'Alternatively, they may want an investment option that's only available from one provider, and another that's exclusive to a different provider. Meanwhile, some will want to test a new provider and its administration before moving the rest of their portfolio over.'
For very last-minute applications, it is worth seeing whether your current account provider – or any other financial company you have a relationship with – is offering a good deal as, again, this could be more straightforward than starting from scratch.
You may be able to set it up with just a couple of mouse clicks or a phone call.
The main high-street banks do not typically offer the most generous interest rates on cash Isas, but you could open an account with one and then transfer to a better-paying account when you have had time to shop around.
If you already have a cash Isa, not all providers will let you open a second Isa with them during the same tax year, even though the rules on this have changed.
You can protect your money from future tax bills, and give yourself time to think about where to invest it, by moving it into the 'holding account' or 'cash account' of a stocks and shares Isa provider.
'If you're rushing to open an Isa ahead of the end of the tax year, it's not necessarily the ideal time to be thinking carefully about your investment strategy,' says Coles.
'If you already know where you want to invest, or you have decided to opt for a ready-made investment, you can snap it up straight away. However, if you have yet to go through this process, it's a great idea to divide the decision to open an Isa to protect your allowance, and the choice of where to invest.'
Many stocks and shares Isa providers offer a holding account or cash account for money that you plan to use to make new investments. Once your money is in there, you can choose to drip-feed it into investments over a period of time.
'This has the added benefit of ensuring you won't invest your annual allowance at what turns out to be a less-than-ideal moment, and are spreading the timing risk,' says Coles.
This may not be the thing to do if you think it will take you a while to get round to investing, though, as you could face a charge from the Isa provider.
Aviva, for instance, will charge you on your investments, with a fee of up to 0.4% applied to any cash you are holding ready to put into stocks and shares. Some other providers, including Barclays, will not.
Coles says: 'If you want to hold cash for a longer period, there's nothing stopping you getting a cash Isa … and switching into stocks and shares when you're ready.'
While you are in the process of checking on your investments, take a look at what is happening to Isas you set up in previous tax years.
If they are cash Isas, they may no longer be earning a market-leading rate, or, if you often pay in at this stage during the tax year, you may be about to come off a good fixed-rate.
Not all of the best Isa deals accept transfers in, but there are some reasonable interest rates on offer. According to Moneyfacts, at the time of writing, one of the best one-year fixed-rate cash Isa deals was offered by OakNorth Bank, paying 4.45% and allowing transfers in from existing cash Isas, but not any other type. Some Isa providers will allow you to transfer from a stocks and shares Isa to a cash Isa.
You can now, in theory, transfer part of your Isa, rather than having to move all of the money at the same time. Lots of providers will let you move part of an Isa from a previous tax year but will insist you move the whole thing if it was opened in the current one.
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