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Find out more'Will savings interest reduce my Isa allowance?'
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I have a cash Isa where the interest is paid monthly.
Will this interest count towards my £20,000 Isa allowance for the year?
Mr Gow from Northamptonshire
'No, and this is why Isas are so useful'
Samm Galloway, Which? money expert, says…
The interest you earn in a cash Isa doesn’t count towards your allowance.
The £20,000 Isa allowance only concerns new money paid into an Isa in the tax year.
Investments can also increase in value within a stocks and shares Isa without using up your Isa allowance.
Additionally, the allowance isn’t affected by you transferring money between Isas, as long as the providers make the transfers and you don’t withdraw the money.
The £20,000 Isa allowance only concerns new money paid into an Isa in the tax year
To look at it another way, if interest and growth counted towards your Isa allowance, there wouldn’t be ‘Isa millionaires’ with £1m or more in Isas.
But a Freedom of Information request by investment platform Plum last year found more than 5,000 of them.
Isas were introduced in 1999, and the allowance was originally lower, only reaching £20,000 in 2017.
Today’s Isa millionaires wouldn’t have had time to add £1m, so achieved this milestone predominantly through investment growth.
- Find out more: Best cash Isas 2026
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