How the new ISA rules affect you

Read the article
How the new ISA rules affect you

Let’s start with the basics – what’s an ISA?

An ISA is an Individual Savings Account. Unlike regular savings and investment accounts, you don't pay tax on returns you make in an ISA. You can add up to £20,000 into ISAs each tax year. 

There are a few different types - Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs and Lifetime ISAs. (The maximum amount you can add to a Lifetime ISA in a tax year is £4,000.)

Yearly ISA allowance allocation

You can open a Cash ISA and a Stocks and Shares ISA through us. The Cash ISA works in the same way as a traditional savings account, with interest paid on your savings. With the Stocks and Shares ISA, you invest your money – its value goes up and down, depending on how your investments perform. And in both cases, you don’t pay any tax on your returns – no matter how big they are.

Learn more about ISAs and the rules around them on the government website.

The new rules

The new tax year kicked off on 6 April 2024. And here’s what’s changed: 

Paying into multiple of the same type of ISA in a single tax year is now allowed

Ever thought about opening a Stocks and Shares or Cash ISA before but couldn’t because you’d already paid into one elsewhere that tax year? 

The old rule was that you could only pay into one of the same type of ISA in a tax year.

But under the new rules, you can pay into more than one of the same type of ISA in a tax year – so you now have the freedom to do just that. (This doesn’t apply to Lifetime ISAs, though.) 

Before - Yearly ISA allowance allocationAfter - Yearly ISA allowance allocation

So if you’ve already paid into a Cash ISA with one provider, then see another Cash ISA elsewhere with a better rate, you can pay into that one too – all in the same tax year.

You can move a little, without moving the lot

You can now transfer part of an ISA you’ve paid into in the current tax year, without the need to transfer the full amount. 

Previously you could only partially transfer ISAs you’d paid into in previous tax years – not the current one. And if you wanted to transfer an ISA you’d already paid into that tax year, you had to move all the money across.

This added wiggle room means you can look out for things like better rates and move some money around, without having to move it all. 

Just so you know, you won’t be able to partially transfer the Cash ISA or Stocks and Shares ISA you can have with us.

Before - Partial ISA transferAfter - Partial ISA transfer

You can see the full ISA rule changes on the government website.

The £20,000 tax-free allowance is still the same

You can still add up to £20,000 each tax year, across the different ISAs you have. But now you have the freedom to choose more of certain types of ISAs that you prefer, and the flexibility to transfer some money from here to there in a single tax year.

After - Yearly ISA allowance allocation

Make the most of your ISA allowance right away

It’s a smart way to make your money work harder as you don’t pay tax on the money you make.

You can open a Stocks and Shares ISA with us using Monzo Investments and start investing as little as £1. Or you can transfer an existing one (in full or in part) from elsewhere. 

And you can open a Cash ISA with us too. Because ours is instant access, you can get hold of your money whenever you want too. And when you don’t need it, it’ll be growing tax-free.

Making the most of your tax-free allowance doesn’t mean you have to add in huge lump sums (unless you want to, of course). Doing small things like adding to your ISAs automatically and turning on roundups to your Pot can make a big difference in the long run. 

The value of your investments could go up or down and you could get back less than you put in.

The taxes you pay depend on your circumstances and could change in the future.

For more help on how to get started and FAQs, visit our Help Centre

We’d love to hear what you think! Join the discussion on Twitter or Facebook, and share your feedback on the community forum.

Don't use Monzo yet? Give it a try today!

You need a Monzo current account to use Investments. 18+, UK residents, Ts&Cs apply.