Briefing: effects of introducing a tax threshold to ISAs

Individual Savings Accounts (ISAs) are tax free savings accounts which allow individuals to save a maximum of £20,000 per year. Currently, ISAs have no upper savings limit. Under a proposed change, there would be an upper limit of £100,000 capping the amount which could be saved without being taxed and thereby discouraging future investment and saving through ISAs.[1]

ISAs are important for offering an incentive for investment in Britain. They also create an incentive for saving money now which will lead to higher returns and more wealth creation in the future. ISAs are also hugely popular as well as trusted, in part due to successive governments avoiding any major changes to them. In 2020-21, over 40 per cent of adults had an ISA.[2] There are two main types of ISA, these are the stocks and shares ISA and the cash ISA.[3] This note reviews stocks and shares ISAs.




Key findings

  • Under current rules, investing £20,000 in a stocks and shares ISA with a further deposit of £20,000 each year will see a total value of £312,699 after 10 years at expected return rates and a value of £1,094,743 after 20 years.[4]
  • The total value of an ISA after 20 years minus the investment over that time would be £694,743.
  • Under a £100,000 tax free cap, £3,000 capital gains tax free allowance and £20,000 maximum annual deposit limit, a total of £138,349 would be paid in capital gains tax if you withdrew from the ISA after 20 years.
  • In 2021-22, stock and share ISAs had a total value of more than £456 billion, with over 3.9 million people with stocks and shares ISAs.




[1] Resolution Foundation, ISA ISA Baby Assessing the Government’s policies to encourage household saving, 16 January 2023., (accessed 24 April 2024).

[2] Stepek, J. Use your UK savings tax breaks while you still can, Bloomberg, 8 April 2024,, (accessed 25 April 2024).

[3] United Kingdom Government, Individual Savings Accounts (ISAs),, (accessed 24 April 2024).

[4] Elizabeth Antaloczy, Cash ISA vs stocks and shares ISA: what's the difference? Unbiased, 29 February 2024,, (accessed 24 April 2024).

This website uses cookies to ensure you get the best experience.  More info. Okay