
Cash ISA rules can be complex, but don't worry, I'm here to break it down for you.
To open a Cash ISA, you must be a resident in the UK, at least 16 years old, and have a National Insurance number. Some Cash ISA providers may have additional requirements, so it's essential to check with them before applying.
The annual subscription limit for a Cash ISA is £20,000, and you can subscribe to a new Cash ISA or transfer existing Cash ISAs to a new one. However, you can only subscribe to one Cash ISA per tax year.
You can open a Cash ISA with a bank, building society, or a specialist Cash ISA provider, but make sure they are authorised by the Financial Conduct Authority (FCA).
What Is a Cash ISA?
A Cash ISA offers tax-free interest payments, which means you could get more for your money. This is the main difference between a Cash ISA and any other savings account.
The tax-free interest payments can add up, making a Cash ISA a great option for those looking to grow their savings over time.
History of Cash ISA Rules
The history of Cash ISA rules is a bit complex, but I'll break it down for you. The first Cash ISA limits were introduced in 1999/2000, with a cash limit of £3,000 and a stocks and shares limit of £4,000.
From 1999/2000 to 2007/2008, the limits remained the same, but in 2008/2009, they increased to £3,600 for cash and £7,200 for stocks and shares. The limits continued to rise annually, with the inflation index used changing from RPI to CPI in 2013.
Here's a table showing the Cash ISA limits from 1999/2000 to 2018/2019:
Origins
ISAs were introduced on 6 April 1999 to replace the earlier personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs).
The UK government created ISAs to provide a more straightforward and comprehensive tax-advantaged savings option.
National Savings and Investments, a state-owned institution, has been offering tax-free accounts, including ISAs, for many years.
These accounts predate ISAs and offer a range of tax-free options.
Junior ISAs were introduced in 2011 to replace the Child Trust Fund, providing a new savings option for younger individuals.
ISAs are available to UK residents aged over 16, as long as they have a National Insurance number.
2007/8/9 Limit Changes

In the March 2007 Budget, the limits for the 2008/9 tax year were increased. This change was significant as it abolished the distinction between a Mini and Maxi ISA.
The insurance component that was once available in both Maxi and Mini ISAs was reclassified, allowing collective investment funds to qualify for either the Cash or Stocks & Shares component.
From 2008/9, the rules changed, and the annual contribution limits were increased. However, the restrictions on investing in ISAs remained in place, affecting the type of ISA that may be opened and the cumulative amount of investment during the course of that year.
Here's a summary of the key restrictions on ISA investments from 2008/9 onwards:
- The limits are per ISA, not per account, allowing for "split ISAs" with multiple accounts at one manager.
- No more than the annual amount limit can be paid in, with restrictions on the amount that can be in cash.
- Newly subscribed money in the current tax year can only be held in one Individual Savings Account of each type.
- Transgressions of the rules may be forgiven by HMRC, but this is at their discretion.
Past Subscription Limits
The past subscription limits for Cash ISAs have changed over the years.
In the early days, from 1999/2000 to 2007/2008, the cash limit was £3,000, the stocks and shares limit was £4,000, and the total subscription limit was £7,000.
The mini and maxi ISA limits were the same, £7,000, for stocks and shares.
In 2008/2009, the cash limit increased to £3,600, the stocks and shares limit to £7,200, and the total subscription limit also to £7,200.
From 2009/2010, the cash limit was £3,600, but over 50s could invest up to £5,100 from October 6th. The total subscription limit was £7,200, and over 50s could invest up to £10,200.
The limits continued to rise, with the 2010/2011 cash limit at £5,100 and the total subscription limit at £10,200.
Here is a summary of the past subscription limits:
Restrictions Removed 2014
In July 2014, the rules surrounding ISAs underwent significant changes. Restrictions were removed, and the "New ISA" branding was introduced.
One major change was the ban on transferring from Stocks and Shares ISA to cash ISA, which was lifted. However, cash to Stocks and Shares ISA was allowed from 2008/2009, and Junior ISAs could always go in both directions.
Interest on cash in a Stocks and Shares ISA is no longer subject to a 20% charge. Instead, all cash in a Stocks and Shares ISA is subject to the FCA client money rules, and cash ISA providers can opt in if they wish.
Cash can now be held in a Stocks and Shares ISA even when not intended for investment. There was no specific time limit on how long cash could be held under the old rules, just whether the ISA manager believed the money was being held for future investment.
The 5% test was a requirement for Stocks and Shares ISAs, which meant that investments had to have a credible possibility of losing at least 5% of the investment. If an investment failed this test, it had to be held in a cash ISA instead.
Here's a summary of the key changes:
- Transfers from Stocks and Shares ISA to cash ISA were allowed.
- Interest on cash in a Stocks and Shares ISA is no longer subject to a 20% charge.
- Cash can be held in a Stocks and Shares ISA even when not intended for investment.
- The 5% test was removed, allowing investments to be held in Stocks and Shares ISAs even if they had a small chance of losing value.
Innovative Finance
Innovative finance ISAs became available from 6 April 2016, designed specifically for peer-to-peer lending investments.
They are similar to cash and S&S ISAs but with a key difference - only platforms with full FCA authorisation can offer them. This initially barred major existing platforms, leaving just eight relatively minor platforms available and 86 awaiting approval.
From 1 November 2016, many transferable debentures, including debt securities and bonds, became eligible for inclusion, provided they are issued by a company or charity.
Equity-based crowdfunding is not included in the eligible products for this type of ISA, a distinction that's worth noting for anyone considering this option.
Frequently Asked Questions
What are the new cash ISA rules?
New cash ISA rules include the ability to hold fractional shares, open multiple accounts, and make partial transfers, with a minimum age of 18. Tax-free allowances remain frozen at £20,000 until 2030
Can I put 20000 in a cash ISA every year?
Yes, you can put £20,000 in a Cash ISA every year, but check the ISA allowance rules for your specific account type.
What is the rule for cash ISA transfer?
Transfers between Cash ISAs typically take 15 working days, while transfers to different ISA types can take up to 26 working days
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