The start of a new tax year has arrived which means savers now have a fresh Individual Savings Account (ISA) allowance to utilise until next April.
Despite speculation of a possible shake-up to ISA rules which would see the annual savings limit on Cash ISAs reduced, the adult ISA allowance for the 2025/26 tax year remains unchanged. Chancellor Rachel Reeves was reportedly considering implementing a tax-fee allowance of just £4,000 on Cash ISAs – a fifth of its current amount – to encourage more people to put money into investments.
But the government has not yet announced any changes to ISA allowances with limits remaining the same for this year. It means that adult savers can put up to £20,000 into a Cash ISA, where savings will be free of income tax and capital gains tax. The Junior ISA allowance has also remained unchanged for 2025/26 at £9,000.
While savers have up until April 5, 2026, to deposit savings into a Cash ISA, financial experts are urging savers to open an ISA and invest the annual £20,000 allowance now instead of waiting until the last minute at the end of the financial year. By putting cash into an ISA at the start of the financial year, this allows your savings to grow tax-free for a much longer period, helping you to maximise returns.
Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, said: “Making use of ISAs to shelter savings and investment from taxation is vital now that the UK tax burden is estimated to be at the highest level since the Second World War. The thresholds for paying the basic, higher and additional rates of tax remain frozen until at least 2028, dragging millions more taxpayers into higher rates of taxation as their income increases.
“While many may feel a sense of relief now that tax year end is over, saving into an ISA does not need to be left until the last minute. With the annual dividend allowance standing at just £500, the Capital Gains Tax exemption remaining at £3,000 and savings rates still on the higher side, taking advantage of the tax efficiency that comes with saving into an ISA remains important.
“Those who want to get ahead this tax year can open or top up their ISAs now. Not only does investing earlier in the tax year remove some of the pressure to make a hasty decision; it also ensures your hard-earned cash gets put to work for longer. After all, as the saying goes ‘the early bird catches the worm’ and in the case of an ISA there is a whole year of potential tax-fee returns to be had.
“Research conducted by Evelyn Partners, the parent company of Bestinvest, found that investing an annual ISA allowance of £20,000 at the start of each tax year can lead to a larger investment pot compared to waiting until the end of the tax year.”
Ms Haine says an alternative to maxing out your Cash ISA allowance now is to invest on a regular basis instead and essentially drip feed money into your account to gradually build up your savings pot.
She adds: “Drip feeding your money into an ISA regularly, such as monthly, removes the emotion from investing: it is all too easy to have your investment decisions clouded by current market turmoil – events that will merely be a blip for those investing for the long-term.
“Regular investing is a great discipline that keeps you going through the ups and down and helps reduce market timing risk as you’ll end up with ‘pound cost averaging’, where fewer units of investments are bought at times when the market is up and more when it is down.”
