As the end of the UK tax year approaches, financial expert Martin Lewis is urging savers to review their Individual Savings Account (ISA) contributions before the deadline. His message is straightforward: unused ISA allowance cannot be carried forward, and any remaining portion will be lost after April 5.
For the 2025/26 tax year, the ISA allowance remains set at £20,000. This is the maximum amount individuals can deposit into ISAs while earning interest or investment returns free from tax. With the new tax year beginning on April 6, savers have a limited window to make full use of this benefit.
Basics
An ISA is a tax-efficient savings or investment account available to UK residents. It allows individuals to earn interest or returns without paying income tax or capital gains tax on those earnings.
There are two main types:
- Cash ISA – works like a traditional savings account
- Stocks and Shares ISA – used for investing in markets
You can choose to allocate your full allowance to one type or split it between both.
Limit
The annual ISA allowance for the 2025/26 tax year is £20,000. This limit applies to total contributions across all ISA accounts within the year.
| Tax Year | ISA Allowance |
|---|---|
| 2025/26 | £20,000 |
| 2026/27 | £20,000 (expected) |
If you contribute less than the maximum, the unused portion does not roll over. Once the deadline passes, that allowance is permanently lost.
Deadline
The ISA deadline falls on April 5, marking the end of the tax year. According to Martin Lewis, waiting until the last moment may create practical issues.
Some providers may stop accepting deposits shortly before the cutoff. This means acting earlier can help avoid missing out due to processing delays or account restrictions.
Returns
ISA products are currently offering competitive rates compared to standard savings accounts. Some top cash ISAs provide returns of around 4.68 percent, making them an attractive option for short-term savings.
For longer-term goals, Stocks and Shares ISAs may offer higher potential returns, though they come with investment risk.
Example
Martin Lewis often uses simple comparisons to explain financial concepts. He describes savings as a cake and the ISA as a protective layer.
| Scenario | Outcome |
|---|---|
| Regular savings | Tax may apply to interest |
| ISA savings | Interest remains tax-free |
The underlying money does not change. The key difference is the tax treatment once funds are placed inside the ISA.
Strategy
Several practical points can help savers make informed decisions before the deadline:
- ISA allowance resets each year on April 6
- You can contribute £20,000 before April 5 and another £20,000 after
- Funds placed in an ISA remain tax-free in future years
- There is no overall cap on total ISA savings
Even if you cannot use the full allowance, partial contributions can still provide long-term benefits.
Changes
Future adjustments to ISA rules are already being discussed. From April 6, 2027, a revised structure is expected to apply.
| Category | Current Limit | From 2027 |
|---|---|---|
| Cash ISA | £20,000 | £12,000 |
| Total ISA | £20,000 | £20,000 |
Under this proposal, individuals under 65 will be limited to £12,000 in Cash ISAs, with the remaining £8,000 allocated to Stocks and Shares or Innovative Finance ISAs.
Planning
Using your ISA allowance effectively can support long-term financial stability. Whether saving for short-term needs or investing for the future, the tax advantages can accumulate over time.
Reviewing your contributions before the tax year ends helps ensure that no available allowance is lost. For those with available funds, acting before April 5 may provide immediate and long-term financial benefits.
ISA rules are relatively stable, but timing plays a critical role. By knowing the deadlines and limits, savers can make more informed decisions about where and when to allocate their money.
FAQs
What is the ISA allowance for 2025/26?
£20,000 per person for the tax year.
What happens if I don’t use my ISA allowance?
It expires after April 5 and cannot be reused.
Can I split my ISA allowance?
Yes, between cash and stocks ISAs.
When does the new ISA year start?
April 6 each year.
