Martin Lewis confirmed with HMRC that the technicality was perfectly legal
Martin Lewis has shared a savvy tip that could nearly double your Individual Savings Account (ISA) limit. Millions of Brits stash their cash in ISAs, which serve as a tax wrapper for your savings.
Whether it is a cash ISA, stocks and shares ISA, or lifetime ISA, it allows our money to grow without having to fork out a portion in tax. With the tax year drawing to a close in just a few weeks – it ends on April 5 – people are seeking clever ways to protect as much of their wealth as possible.
Most ISAs permit individuals to deposit up to £20,000 a year inside, keeping it safe from tax. The two most obvious exceptions are the lifetime ISA, with an annual limit of £4,000, and the junior ISA, capped at £9,000.
However, during ITV’s The Martin Lewis Money Show Live, even the money-saving expert himself was somewhat baffled by one viewer’s ingenious strategy to deposit more than £20,000 in a single tax year.
Viewer Kate posed the question, which was read aloud to Martin before the studio audience. She asked: “Could you clarify what the total allowance is in the tax year you turn 18 please? Is it £9000 before 18th birthday, and then the remaining £11,000 after 18th birthday, until April 5?”
Martin replied: “Kate, you have got me. I have not thought about that before. I believe the junior ISA regime up to £9000 is an entirely different regime to the ISA regime. So it is my belief that, in a tax year when you turn 18, you could put £9000 in a junior ISA and when you turn 18, you could put £20,000 in an adult ISA, which means you could put £29,000 in an ISA in that year.
“I am 80 per cent certain of that – I will need to go and check the ISA guidance from providers.”
Mr Lewis did verify this and, on social media, he subsequently stated: “CONFIRMED: I was asked on @itvMLshow if within a tax year someone turns 18, could they put £9,000 in a junior ISA before their birthday and the full £20,000 in a normal ISA after. Ie if they’re lucky enough to have £29k is all ISAable. I said I was 80% sure it was a yes you can do both as they are separate allowances, now HMRC has confirmed that is correct.”
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Naturally, the strategy would require the individual to be either 17 or have recently turned 18, not to mention having £29,000 available to deposit into both ISAs. This prompted some interesting responses on social media, with one person commenting: “God bless all the 17-year-olds with a spare 29k.
“Absolutely amazed that you got through to HMRC so quickly! Can I have your contact,” joked another, whilst a third remarked: “So a parent could gift these sums if available to their child….”
The most prevalent type of ISA currently is a cash ISA, which has a £20,000 limit. However, this will decrease to £12,000 in April 2027 after Chancellor Rachel Reeves lowered the amount in an effort to motivate people to invest rather than hoard large amounts of cash, which are negatively impacted by inflation. Historically, investing also yields better returns over an extended period.
Equipped with this information, another individual posed the intriguing question: “So with the same logic -if you’re 64 can you put £12k into a cash ISA then put £20k in after you turn 65 within the tax year?”
