Research from Fidelity International found that more than half (53%) of ISA investors aim to use either most or all of their £20,000 allowance before the deadline, which is the end of the tax year. Within this group, one in three (32%) ISA investors plan to use their full tax-free allowance before the end of the tax year.
According to Fidelity International, more than two in three (68%) UK investors currently hold a stocks and shares ISA, with nearly half (46%) having already contributed to it during the current 2024/25 tax year.
Although one in three (32%) investors aim to utilise their full £20,000 ISA allowance before the clock resets, 14% admit they won’t use their allowance at all – potentially missing out on valuable tax-free growth.
Ed Monk, associate director at Fidelity International, said: “Individual savings accounts (ISAs) are a great vehicle for investors, allowing contributions of up to £20,000 per year with any returns being protected from tax. However, on 6 April, the annual ISA allowance will reset, so for those who have yet to maximise their full allowance and who can afford to make additional contributions – remember that if you don’t use it, you’ll lose it.
“It is also important to consider your broader financial goals when planning your investments. Many investors are choosing to keep money in cash savings, and while cash can provide short-term security, inflation can erode its real value over time, meaning your money may not go as far in the future. For long-term goals, stocks and shares ISAs offer a way to grow your wealth and preserve its purchasing power over the years. Understanding your long-term financial objectives and making informed decisions about how you allocate your investments can help you better achieve your financial goals.”
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Tips to make the most of your ISA allowance
Split your allowance
If it suits your personal circumstances, goals and attitude to risk, you could choose to invest your entire ISA allowance into a stocks and shares ISA.
But you can also split your allowance across ISA accounts of different types. That means you can hold a stocks and shares ISA, cash ISA or Lifetime ISA (LISA) in any combination – as long as you stay within the £20,000 limit.
Opt for cash savings
If you are new to investing or are not ready to invest your money right away, you can still secure your tax-free allowance using a stocks and shares ISA by putting your money into ‘cash’ via cash funds or the cash facility within investment accounts where a competitive rate of interest is paid. You can then choose where to invest your money later when you are ready.
Contribute to your children’s future
A Junior ISA (JISA) is a tax-efficient wrapper allowing you to invest up to £9,000 per year either in cash or stocks and shares.
The annual allowance limit applies solely to the account holder – the child – rather than the parent or guardian opening the account. That means that you can gift up to the full allowance of £9,000 without it affecting your own allowance.
Transfer your ISA and get cashback
If you have multiple ISAs with different providers, you may wish to transfer them to a single provider. Consolidating your ISAs could give you a clearer picture of your wealth and better value for money, and could get your money working harder.
Before consolidating investment accounts, it’s worth checking whether you can be paid for the move – some platforms will offer an incentive to transfer your ISA savings, which can be a nice way to top up your savings.
You can inherit your ISA allowance
If your spouse or civil partner dies, you can inherit the value of their ISA on top of your usual £20,000 allowance through additional permitted subscription (APS) rules.
There are certain rules around the timing of this, and some nuances between different ISA providers, so it is best to check with your provider if you are expecting to inherit an ISA.
