Martin Lewis explains how to have more than £20,000 in a Cash ISA

Cash ISA rules are a hotly contested topic at the moment after it was confirmed that the government is considering cutting the £20,000 annual allowance for the tax-free savings accounts.

But money expert Martin Lewis, in a Cash ISA special edition of his popular The Martin Lewis Podcast, has explained to confused savers how you can have more than £20,000 in a Cash ISA at any given time - by using your allowances each year and transferring your ISA to chase the best rates.

A listener Mark, on Twitter, asked Martin: “My confusion starts on year two, when you have the original £20,000 from the previous year and you add another £20,000 in the new tax year. If you transfer to another provider can you transfer the entire £40,000 or does the £20k per year limit apply?”

Martin told him: “Let’s go very plain here. As I always say, a Cash ISA is simply a savings account you don’t pay tax on.

“You get £20,000 per year. The limit is on the money you put in. So you can put in up to £20,000 of new money in a tax year. Everything else does not use up your limit and is not governed by the tax year rules.

“So absolutely yes, you can transfer the entire £40,000, there’s no limit on transfers, the £20,000 rule doesn’t apply. Once money is in an ISA, you’ve used up that year’s allowance, it might be five year’s ago’s allowance that you used up, it stays in an ISA tax free year after year and it can be moved and transferred.

“And as long as you’re not adding money to it, you’re not using up your allowance. You can add money into it, but only up to the £20,000 allowance.”

As Martin explains, you can only deposit £20,000 per year under the current rules - though there is talk that the limit could be cut as low as £4,000 in future - but once the money is in an ISA, it can stay in there, tax-free, forever, and you can transfer it between different ISA accounts without using up your allowance.

For example, if someone was to use up the full £20,000 Cash ISA allowance in 2020, 2021, 2022, 2023 and 2024 (all of which were £20,000 in each year), you would now have £100,000 in that single Cash ISA, which is allowed, and protected from tax, because you didn’t deposit more than the £20,000 allowance in any single year.

You can then transfer that £100,000 between different ISA providers to get the best rates, and still deposit another £20,000 this year.

Just remember that you only get FCSA protection on amounts up to £85,000 in a single account, so if you have more than £85,000 saved, it might be prudent to split it between ISAs.

As Blue Sky IFAs explains: “With a Cash ISA, you earn interest on your deposits. The money placed in a cash account is safe, it will not fluctuate, and, assuming you stay within the limit of the Financial Services Compensation Scheme (FSCS), up to £85,000 will be protected per person per authorised bank or building society should an authorised financial services firm fail.”

The Martin Lewis Podcast Cash ISA special episode from April 16, 2025 is still available to listen to via Spotify, BBC Sounds and Apple Music.