ISA allowances remain unchanged at £20,000 for adults and £9,000 for juniors, with possible future reforms.
From Morningstar: 2025-03-31 06:42:00
ISA allowances for 2025-2026 will remain at £20,000 for adult ISAs and £9,000 for junior ISAs, subject to future changes. The Spring Statement hinted at possible reforms to cash ISAs. The current freeze on ISA allowances until 2030 increases the likelihood of the government raising its tax take over the next five years.
There are various types of ISAs, including cash, stocks and shares, junior, and lifetime ISAs. ISAs offer tax-free benefits, such as no tax on dividends or savings interest received within the account and exemption from Capital Gains Tax, but they are not automatically exempt from Inheritance Tax.
Each individual has an annual ISA allowance. The lifetime ISA counts towards the overall ISA allowance, and some accounts offer flexibility in withdrawing money without losing part of the allowance. Providers allow opening accounts with small amounts, not requiring a lump sum investment.
Age requirements for ISAs vary, with a minimum age of 16 for cash ISAs, 18 for stocks and shares ISAs, and 18-40 for lifetime ISAs. Parents can open junior ISAs for children from birth to age 16. The ISA allowance runs from tax year to tax year, resetting every April.
Mixing and matching ISA accounts is allowed, with a limit of one of each type per tax year. This allows for a diversified approach to investing the £20,000 allowance. Despite discussions of a “British ISA”, Labour has confirmed there will be no such product. Transfers between ISA providers are common for consolidating savings without using up the annual allowance. 1. The stock market reached record highs today, with the S&P 500 closing at 4,500 for the first time ever. Tech stocks led the rally, with Apple, Amazon, and Google all posting strong gains.
2. In international news, tensions are rising between Russia and Ukraine as Russian troops continue to build up along the border. The US and NATO have expressed concern over the situation, urging Russia to deescalate and respect Ukraine’s sovereignty.
3. The latest unemployment numbers show a slight decrease in jobless claims, with 340,000 new claims filed last week. Economists are cautiously optimistic about the trend, but warn that the labor market still has a long way to go to fully recover from the pandemic.
4. In health news, a new study has found that the Pfizer-BioNTech COVID-19 vaccine is highly effective at preventing severe illness and hospitalization from the Delta variant. The study also shows that a third dose of the vaccine provides additional protection against the variant.
5. On the environmental front, a report released today highlights the urgent need for action on climate change. The report warns that global temperatures are on track to rise by more than 2 degrees Celsius by 2100 if drastic measures are not taken to reduce greenhouse gas emissions.
Read more at Morningstar: Everything You Need to Know About ISAs