Every year, the government sets a limit on the amount of money you can put into ISAs. This amount is known as the ISA allowance.
The ISA allowance for the current tax year is £20,000. The Junior ISA allowance for this tax year is £9,000 – this amount is separate to the £20,000 ISA allowance.
If it suits your personal circumstances, financial goals and attitude to risk, you could choose to invest your entire annual ISA allowance into a stocks and shares ISA.
You can split your allowance across the different types of ISA available. So, you could choose to contribute to a stocks and shares ISA, a cash ISA (which could be a Help to Buy ISA), an Innovative Finance ISA and a Lifetime ISA all within the same year – contributing as little or as much of your annual allowance as you want into each type.
However, remember there are some restrictions: you can only pay a maximum of £4,000 into a Lifetime ISA per tax year, and you can only contribute to one of each type of ISA per tax year. It’s also important to remember that if you have both a Lifetime ISA and Help to Buy ISA, when you buy your first home you’ll only be able to get the government bonus for that from one of them. Find out more about how the different types of ISA work.
No matter how you split your allowance across ISAs, make sure never to contribute more than £20,000 during the tax year. If you do, you won’t get any of the ISA tax benefits on the excess amounts.
Your ISA allowance resets at the start of each tax year. The tax year starts on 6th April of one year and ends on 5th April of the following year. Your allowance, or any unused portion of it, doesn’t carry over to the next tax year – so if you don’t want to lose it, use it!
With Nutmeg, provided you are eligible, you can have a stocks and shares ISA and a stocks and shares Lifetime ISA, or just one of them. Nutmeg doesn’t offer cash ISAs, Innovative Finance ISAs or Help to Buy ISAs.
You can split your annual ISA allowance between a combination of different providers, as long as you don’t contribute to the same type of ISA with more than one provider in any one tax year. So, for example, you could choose to put some money into a Nutmeg stocks and shares ISA and/or a Nutmeg Lifetime ISA, and the rest of your allowance into other types of ISA with other providers. You can do this in any combination you wish so long as you don't contribute more than £4,000 into a Lifetime ISA and more than £20,000 in total during the current tax year across all your ISAs.
If you invest more than this year’s ISA allowance in your Nutmeg account before the end of the current tax year, any investments beyond the ISA allowance will be treated as a general investment account and you may have to pay tax on any returns.
As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. A stocks and shares ISA may not be right for everyone and tax rules may change in the future. If you are unsure if an ISA is the right choice for you, please seek financial advice.
Our team of specialists can help answer any questions you may have.