5 surprising things you might not know about your ISAs

ISAs are one of the most straightforward options for building tax-efficient wealth and have become the go-to for many savers and investors.

According to UK government figures, we collectively paid £135.7 billion into 16.8 million adult ISAs in 2024/25.

However, even if you regularly use an ISA, you might be unaware of certain rules and regulations. With several types to choose from and recent legislative changes to consider, ISAs are becoming more complex.

Here are five things you might not know about your ISAs.

1. You can now pay into as many different ISAs as you like

For many years, you could split your yearly £20,000 allowance between different types of adult ISAs (Cash, Stocks and Shares, and Innovative Finance). However, the rules stated that you could only subscribe to one of each type of ISA.

For example, you could pay into a Cash ISA and a Stocks and Shares ISA in the same year, but you couldn’t contribute to two Cash ISAs.

What you may not know is that this rule changed on 6 April 2024.

Since then, you’ve been able to contribute to as many different ISAs as you like. This allows you to split cash savings between easy-access options that may have lower interest rates, while also putting some cash in fixed-term accounts to generate more growth.

You also have greater opportunity to move your cash regularly as interest rates fluctuate.

The only exception is that, despite the rule change, you can only contribute to one Lifetime ISA each year.

2. You can transfer between ISAs without using your allowance

You may worry that moving your wealth between different ISAs will use up your allowance, but this isn’t normally the case.

When you transfer cash or investments from one provider to another, this doesn’t typically count towards your £20,000 allowance.

This means you can move existing cash savings into an account with a better interest rate, while also making further contributions.

Additionally, you could transfer investments into a Stocks and Shares ISA with more favourable fees.

Taking advantage of the flexibility to move your savings around could help you maximise growth and reduce your investment costs.

3. Flexible ISAs let you withdraw and redeposit funds without using your allowance

If you’re using an ISA to hold emergency funds or save for short-term expenses like a holiday, you might make regular withdrawals.

In some cases, if you were to pay these funds back in later, you would use up a portion of your ISA allowance. However, if you use a flexible ISA, the rules are different. Any wealth that you redeposit in the ISA doesn’t count towards your allowance.

With this in mind, if you expect to make regular withdrawals, you may want to consider a flexible ISA.

4. Your spouse or civil partner can effectively inherit your ISA allowance temporarily when you pass away

If you pass away, your ISA forms part of your taxable estate. This could mean that it’s subject to Inheritance Tax (IHT).

However, a spouse or civil partner can inherit your entire estate without IHT.

This means that if you leave your estate to them, they shouldn’t pay IHT on cash or investments you hold in an ISA. Your ISAs become a “continuing account of a deceased investor”, meaning they benefit from the same tax exemptions, but nobody can make any further contributions.

What you may not realise is that a spouse or civil partner can also benefit from an Additional Permitted Subscription (APS) when inheriting an ISA from you.

The APS effectively increases their ISA allowance by an amount equal to the value of the inherited funds. So, they can transfer the wealth from your ISA into their own, while still maintaining their full £20,000 allowance.

Bear in mind this only applies to a spouse or civil partner. If somebody else inherited your ISA, they would need to use their own allowance, potentially across multiple tax years, to move the funds into their own account.

You may want to consider this when deciding how to divide your estate.

5. You could pay tax on interest from cash in a Stocks and Shares ISA after April 2027

Changes to ISA rules will mean that, from April 2027, you can only pay £12,000 of your £20,000 allowance into a Cash ISA if you’re under 65. The remaining £8,000 will be reserved for other types of ISAs.

You may be aware of this already, but the government has announced additional rules to close certain loopholes, and these could catch you out.

For instance, interest you generate on cash held in a Stocks and Shares ISA will be subject to tax at a flat rate of 22%. Tax may also be due if your portfolio is entirely made up of “cash-like” investments.

You also won’t be able to transfer from a Stocks and Shares ISA into a Cash ISA.

It’s important to review your current Stocks and Shares ISA and ensure that you won’t inadvertently trigger a tax charge once the new rules take effect in April 2027.

Get in touch

ISAs are an effective planning tool, but the rules can be complex. To ensure you are making the most of yours, please contact us at hello@ardentuk.com or call or WhatsApp us on 01904 655330.

As an award-winning financial advice company with advisers included in the 2025 VouchedFor Top Rated guide, we can assure you that we’re a bona fide company providing excellent advice and high-quality service.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.