ISA Allowance Explained
You can save up to £20,000 per tax year into ISA products. This limit, known as your ISA allowance, is set by the UK Government and allows you to earn interest or returns tax-free.
Your ISA allowance is shared across all ISA accounts you hold.
Flexible ISAs Explained
The Chip Cash ISA and the Stocks and Shares ISA are flexible.
A flexible ISA allows you to withdraw funds and replace them within the same tax year without affecting your annual ISA allowance (£20,000). However, some key rules apply:
Withdrawals must be replaced in the same ISA account they were taken from.
If withdrawn funds are not replaced within the same tax year, that portion of the allowance is permanently lost.
If you withdraw money from a previous tax year's contributions, you can still replace it within the same tax year without affecting your allowance.
If previous tax year funds are not replaced before the tax year ends, they are permanently removed from the ISA wrapper and cannot be reinstated.
The flexibility applies only to that specific ISA account.
Current vs. previous tax year funds
Current tax year contributions: Withdrawals from current year contributions can only be replaced within the same ISA account they were taken in the same tax year.
Previous tax year contributions: Withdrawals from previous years' contributions must be replaced into the same ISA account from which they were withdrawn, and within the same tax year.
What happens when you withdraw both current and previous tax year contributions?
When withdrawing from an ISA that contains both current and previous tax year funds, the order of withdrawal is:
Current tax year funds are used first.
Previous tax year funds are used second.
Example:
You have:
£5,000 from the current tax year
£10,000 from a previous tax year
If you withdraw £5,000, this comes from the current tax year. If you then withdraw another £100, this would be taken from previous tax year funds.
How does withdrawing interest affect my allowance?
You can redeposit the withdrawn interest within the same tax year without affecting your £20,000 limit.
Example:
You deposit £20,000 into an ISA and earn £70 in interest:
You deposit £20,000 into an ISA and earn £70 in interest.
You withdraw £70 of interest, and leave the £20k in the account
Your available ISA allowance is £70, as you can replace the interest you withdrew
If you withdraw the £20,000 + £70 interest, your available ISA allowance would be £20,070 into the same ISA within the same tax year.
ISA allowance and growth in a Stocks and Shares ISA
Your ISA allowance does not change based on the performance of your investments. Here’s how it works:
Each tax year, you have a set ISA allowance (£20,000). This is the maximum amount you can contribute to your ISA, not the maximum amount it can grow to.
Market fluctuations (gains or losses) do not affect your allowance. If your investments drop in value, you cannot "reinvest" more money to make up for the loss—your contribution limit remains the same.
Similarly, if your investments grow, you won’t be taxed on the gains, and this growth does not count toward your allowance either.
Example:
You invest £20,000 into a Stocks & Shares ISA.
The value drops to £18,000 due to market changes.
You cannot add another £2,000 to "top up" your ISA for that tax year.
If the value later grows to £25,000, this is still all tax-free. It does not reduce next year’s ISA allowance, nor have you exceeded this year’s ISA allowance.
Where to check your remaining allowance in the Chip app
To check how much of your annual ISA allowance remains, go to the Profile tab in the app and tap on ISA allowance.
Please note that this figure only reflects the allowance used within Chip and does not include any contributions made to ISAs you hold with other providers.
Need further help?
If you have any further questions, get in touch with our support team using the in-app chat (this can be found in the Contact us section on the Profile tab) or by email at hello@getchip.uk for further help.