Each year HMRC set an annual ISA allowance that specifies just how much you can pay into ISAs for the next tax year.
They now specify a total ISA allowance that can be split between an Investment ISA and a Cash ISA in any proportion you like, or paid into just one type of ISA.
How much can I save in an ISA this year?
ISA allowances last for 12 months and run from one tax year to another - 6th April to 5th April - as opposed to being based on the Gregorian calendar (January to December).
For the 2015/16 tax year the total annual ISA allowance for the following age groups is:
|Age group||Junior ISA allowance*||Adult ISA allowance||Combined allowance|
|Under 16||£4,080||not eligible||£4,080|
|Over 18||not eligible||£15,240||£15,240|
Can I roll my ISA allowance over from one year to next?
No, ISA allowances cannot be carried over from one year to the next.
If you do not use your ISA allowance in full by the end of a tax year (5th April) you lose it, although you will start the next tax year with a new ISA allowance.
It is for this reason that you should make the most of your ISA allowance if you want to maximise the chance to protect your money from the tax man.
If I take money out of an ISA can I pay it back in?
No, if you withdraw money from an ISA you cannot pay it back in without using up more of your annual ISA allowance.
So even if you withdraw all the money from your ISAs, if you have already paid in the maximum amount you are able to this tax year, you will not be able to add a penny more.
For example if you pay £4,000 in a Cash ISA but withdraw it two months later, you will only be able to pay a further £11,000 into your Cash ISA over the rest of the tax year from July 1st.
However, from autumn in 2015, it will be possible to take money out of an ISA and pay it back in later without it affecting your ISA allowance.
Can you have more than one ISA?
You can transfer previous tax years' ISAs individually from one account to another, or amalgamate them together.
There is no limit to the number of ISAs you can hold - it is possible to open a new Cash ISA and a new Investment ISA each tax year and keep your old ones open.
However, you can only pay into one Cash ISA and one Investment ISA each tax year.
It is possible to transfer both your current year's ISAs and previous tax years' ISAs from one provider to another to ensure that your ISA savings remain profitable.
What happens if I put too much into an ISA by mistake?
If you exceed your annual ISA allowance, any money over the limit will not qualify for tax free status.
So while any money within the ISA allowance limit will earn interest or returns tax free, anything over will be liable for tax.
If you find that you have paid too much into an ISA you should contact the HMRC ISA Helpline, to explain the problem as they will inform you of whether you need to take any action.
What happens if I pay in to too many ISAs by mistake?
You can pay into one Cash ISA and one Investment ISA each tax year. If you accidentally pay into multiple Cash ISAs or multiple Investment ISAs within the same tax year then your second ISA will be invalid and not eligible for tax relief.
Rather than withdrawing the money or closing the account you should contact HMRC's ISA Helpline, explain the issue and follow their instructions.