An ISA allowance refers to the maximum amount of money an individual can contribute to an Individual Savings Account (ISA) in a given tax year.
It represents the limit set by the government on how much you can deposit into an ISA while still enjoying the tax advantages associated with it. The current limit in the UK is £20,000 for the 2023/24 tax year
ISA Allowance Example:
For example, the current ISA allowance is £20,000 for the tax year. This means that within that period (6 April to 5 April), you can deposit up to £20,000 into your ISA account without incurring any tax on the interest earned or any capital gains.
If you save £15,000 in one ISA, you still have an allowance of £5,000 remaining to contribute during that tax year to another ISA provided its not the same type of ISA. It's important to note that the ISA allowance is subject to change each tax year.