Subscription Limits
There are restrictions on investing in ISAs in each tax year (6 April to the following 5 April) which affect the type of ISA that may be opened and the cumulative amount of investment during the course of that year. The key restrictions are:
- No more than the annual amount limit can be paid in and the amount that can be in cash is restricted in an adult ISA. Any amount not used for cash can be used in a stocks and shares ISA.
- Newly subscribed (paid in) money in the current tax year can only be held in up to one cash ISA and up to one stocks and shares ISA. However, provided the annual contribution limits are not exceeded HMRC can be expected to forgive one transgression using too many accounts and merely post a letter reminding about the rules after the annual returns from ISA providers reveal the problem. This should not be relied upon, as it is at HMRC's discretion.
These restrictions only apply to money paid in during the current tax year. For adult ISAs an unlimited number of accounts can hold money from past years and it can be freely moved between providers using ISA transfer requests.
| Tax year | Cash limit | Stocks & shares limit | Total subscription limit | Junior ISA limit |
|---|---|---|---|---|
| 1999/2000 to 2007/2008 (mini) |
£3,000 | £4,000 | £7,000 | not available |
| 1999/2000 to 2007/2008 (maxi) |
£3,000 | £7,000 | £7,000 | not available |
| 2008/2009 | £3,600 | £7,200 | £7,200 | not available |
| 2009/2010 | £3,600 (£5,100 for over 50s from 6 Oct 2009 ) | £7,200 | £7,200 (£10,200 for over 50s) | not available |
| 2010/2011 | £5,100 | £10,200 | £10,200 | not available |
| 2011/2012 | £5,340 | £10,680 | £10,680 | £3,600 |
| 2012/2013 | £5,640 | £11,280 | £11,280 | £3,600 |
In the March 2010 budget the Chancellor of the Exchequer Alistair Darling announced that in future years the limits would rise annually with inflation, rounded to the nearest £120, to ease the mathematics for those using monthly payment schemes. From 2013–14 the inflation index used is changing from RPI to CPI.
Initially there was a distinction between a 'mini' ISA, which could hold cash OR stocks, versus a 'maxi' ISA which could hold cash AND stocks. Any UK resident individual of at least eighteen years of age could invest in one 'maxi' ISA, with both components provided by a single financial institution. Alternatively, a person could invest in two 'mini' ISAs, one for each component. The two mini ISAs could be with two different providers if the investor wished. TOISAs and the full transfer of ISAs created in previous years to another provider had no bearing on these restrictions. From tax year 2008/2009 the distinction between a mini and maxi ISA was abolished.
Read more about this topic: Individual Savings Account
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