As the new tax year begins in April 2025, UK savers are being encouraged to take advantage of revised Cash ISA rules that promise greater flexibility and potential financial gains.
The government has introduced several key changes to how Individual Savings Accounts (ISAs) work—prompting financial experts to urge Britons to act quickly to maximise their tax-free savings.
Here’s what you need to know about the new rules, why it’s worth considering opening a Cash ISA now, and how to make the most of your allowance in 2025.
ISA Allowance Stays at £20,000
For the 2025/26 tax year, the total annual ISA allowance remains unchanged at £20,000, according to official guidance from GOV.UK. This amount can be split across multiple types of ISAs:
- Cash ISA
- Stocks and Shares ISA
- Innovative Finance ISA
- Lifetime ISA (limited to £4,000/year)
The good news? You can now open and contribute to multiple ISAs of the same type in one tax year, a significant shift from previous restrictions that limited you to one per type.
Multiple ISA Accounts Now Allowed
Under the updated rules, savers are now allowed to open more than one Cash ISA in the same tax year, as long as total contributions across all accounts don’t exceed the £20,000 cap. For example, you could spread your savings across two different providers to benefit from better interest rates or features.
This flexibility is aimed at encouraging competition between providers and offering consumers more choices.
MoneyHelper confirms that this change applies to all ISA types, meaning you can also have multiple Stocks and Shares or Innovative Finance ISAs open simultaneously.
Age Limit for Cash ISAs Now 18
Previously, 16- and 17-year-olds could open a Cash ISA. But from April 2025, only those aged 18 or older can open an adult Cash ISA.
Younger savers can still save tax-free through a Junior ISA, which has a separate annual limit of £9,000.
Partial Transfers Now Permitted
Another beneficial change is that savers can now transfer part of their ISA funds to another provider, even if those funds were contributed in the same tax year. This wasn’t possible under the old system, which required full transfers if the money was from the current tax year.
This rule offers more flexibility for savers seeking better interest rates or more suitable investment options mid-year.
Vanguard UK notes that this change will benefit those wanting to move portions of their savings without disrupting their full investment.
Not All Providers Have Adopted New Rules
Despite these beneficial changes, not all financial institutions have adopted the new ISA flexibilities. Some banks and building societies still limit savers to opening just one Cash ISA per tax year or may not support partial transfers.
Savers are strongly advised to check directly with their chosen provider to understand how they’ve implemented the new rules before making contributions or transfers.
The Guardian reports that while major institutions like NS&I and Nationwide are rolling out the updates, smaller providers may need more time.
Why Open a Cash ISA Now?
With inflation still affecting savings and the Bank of England’s base rate staying relatively high, Cash ISAs are seeing improved interest rates, with some accounts offering 3% to 5% annual interest.
Opening a Cash ISA now could lock in a high interest rate, protect your savings from tax, and give you more freedom to manage your money as rates fluctuate later in the year.
A Cash ISA also remains tax-free, meaning all interest earned stays in your pocket—even if your total income crosses the Personal Savings Allowance threshold.
Final Tips for Savers
- Review your current ISAs and check if your provider supports the new rules.
- Compare interest rates before opening a new Cash ISA. Use tools like MoneySavingExpert or Which? for guidance.
- Consider opening multiple ISAs strategically to maximise rates and features, but stay within the £20,000 limit.
- If you’re under 18, consider a Junior ISA or regular savings account.
This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.
Himanshu Sharma writes for Weekend Spy, focusing on recruitment, government schemes, and current affairs. He is dedicated to making complex information accessible to readers.
Himanshu enjoys playing chess, hiking, and trying new recipes, always seeking ways to combine his love for writing with his passion for exploration. Connect with Drop him an email at [email protected].
