Published On: Wed, Aug 21st, 2019

What is the cash ISA limit for 2019/20? Allowance on annual ISA savings explained | Personal Finance | Finance

From the interest rates to the ability to earn interest on savings without paying cash, there are a number of reasons why one may opt for a cash ISA. However, there is only so much money that a person can pay into this type of account in the tax year – which runs from April 6 to April 5. What is the cash ISA limit for 2019/20? In the current tax year, it’s possible to put up to £20,000 into an ISA.

A person will get a new allowance each tax year.

It’s only possible to pay into one cash ISA in each tax year.

Since 2016, all savers have been able to benefit from the Personal Savings Allowance (PSA) on their savings accounts.

This means that basic rate tax payers can earn up to £1,000 each year in tax-free interest, while higher rate tax payers can earn up to £500 per year.

Those who are additional rate tax payers do not get the Personal Savings Allowance.

An ISA may be used in addition to the PSA.

There are a number of different types of cash ISAs.

This includes easy access options, as well as regular savers and Junior ISAs.

As the name suggests, the former allows a person to access their money – and this is without a penalty, although there may be a restriction on withdrawals.

A regular saver ISA offers a fixed interest rate, provided regular deposits are made each month.

Junior ISAs allows a saver to put away a maximum of £4,368 in this tax year tax-free for their child – if they are under 18 and live in the UK.

Another type of cash ISA is a Lifetime ISA, which allows a person to deposit up to £4,000 each year, with the government adding another 25 per cent of what is deposited – up to £1,000 per year.

It’s only possible to withdraw the money penalty-free when one buys their first home or after reaching the age of 60 – otherwise a 25 per cent charge will apply.

This differs to a Help to Buy ISA – an account which sees the government boost savings by 25 per cent.

With this type of cash ISA, for every £200 deposited, the saver will receive a government bonus of £50, up to £3,000.

READ MORE: Help To Buy ISAs: The best one to buy – plus how to increase your chance of owning a home

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