ISA allowance - Warning: Pretty basic question

Davesquire

Hello, Captain Stupid here.

The most basic question, as I'm confused.

If I put £20,000 into an ISA in March 2026 and then put £20,000 in April 2026, does the tax free component apply to both deposits or only one? I.e. can I only get tax relief on up to £20,000 total in any one year.

Apologies for the simplicity of the question, which probably has many banging their heads on the nearest hard object, but I have Dyscalculia. Very frustrating when you are almost 60!

Thank-you.

Exodi

To be clear, the cut off point is the 6th April - deposits made before this are considered to be in the previous tax year, deposits made on or after and are considered to be in the next tax year. I only point this out as you say "put in £20,000 in April 2026" but if you were to put it in on 1st April, it would still be classed as the previous tax year so would cause issues if you also deposited £20k the month before. You would be able to deposit £20k on 6th April for the start of the new tax year no problem, as many do.

I think you are thinking about it wrong regarding 'tax relief' - you don't receive any tax relief back when you deposit money like you might with a pension (and then you are charged tax on the way out). The perk of an ISA is because the money you deposited will have generally already incurred tax, you don't pay any tax on the money on the way out (e.g. income tax/capital gains), but you are only able to deposit up to £20k (known as the annual ISA allowance) per year across all your ISA's.

£20k deposited is £20k in the account is £20k if you withdraw it (or more if you leave it in there and it grows with interest/investment growth).

While pensions are usually superior, ISA's are widely used for their flexibility, for example to bridge the gap between retiring early and when you can access your pensions, or to subsidise your income if your income is sitting just under a higher tax threshold.

Albermarle

https://forums.moneysavingexpert.com/discussion/6685213/isa-allowance-warning-pretty-basic-question

A good idea would be to spend some time reading through this forum.

Davesquire

https://forums.moneysavingexpert.com/discussion/comment/82155372#Comment_82155372

Thank-you for your response. Maybe a simple yes or no would have been appreciated (unless it is not that straight forward). Otherwise, yes, I shall emerge from a dark room in decades to come with a long flowing beard and bleary eyes and say "Ah, that is the answer that I have sought over all these years".

Davesquire

https://forums.moneysavingexpert.com/discussion/comment/82155296#Comment_82155296

Thank-you for your answer. I believe that I did deposit the second £20k after 6th April (but will check). My wording was not particularly clear, so I did mean that it was tax-free on extraction.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82155648#Comment_82155648

There are lots of different ISA rules, and it can be quite confusing and easy to make mistakes, so I just thought it would make sense for you to get more up to speed generally.

Davesquire

https://forums.moneysavingexpert.com/discussion/comment/82155658#Comment_82155658

Thank-you. Unfortunately, the more I read the more confused I get. Wouldn't it be nice if tax wasn't taxing.

friolento

https://forums.moneysavingexpert.com/discussion/comment/82155662#Comment_82155662

A simple rule for you: with ISAs, you can ignore any and all tax because there is none. That's the entire point of ISAs, tax-free saving and investing.