Savers are being urged to make full use of this year’s £20,000 individual savings account (ISA) allowance with rule changes on the horizon.

Currently, adults can invest up to £20,000 each tax year into ISAs, whether in cash, stocks and shares, or a combination of both. From April 2027, however, while the overall annual limit will remain £20,000, those under 65 will only be able to allocate a maximum of £12,000 into cash ISAs. This makes planning ahead increasingly important.

To maximise returns, savers should consider investing earlier rather than later in the tax year. Doing so allows more time to benefit from tax-free interest, dividends and capital growth. Delaying contributions can reduce overall returns – particularly for higher-rate taxpayers.

From April this year, dividend tax rates will increase, and savings tax rates go up from next April, making ISAs more attractive from a tax perspective.

There’s generally more focus on starting off a new ISA allowance, but savers should also track the performance of existing holdings – both stocks and shares and cash ISAs. If investment returns are poor, or interest rates have dropped, you can switch products, and providers, without affecting current allowances. Since increased flexibility was introduced in 2024, you can take out multiple ISAs provided the amount invested does not exceed the £20,000 limit.