Key takeaways
- ISAs could help you grow your money further by allowing you to save and/or invest without paying tax on any gains you make in the account (such as capital gains tax).
- Your ISA allowance is £20,000 for the 2025/26 tax year and will refresh on 6th April — and if you don’t use it before the deadline, you’ll lose it.
- The sooner you put money in an ISA, the more time it has to benefit from compounding— which can accelerate growth by allowing your gains to make their own gains.
- There are different types of ISAs (including for your children), and the right one for you will depend on your financial circumstances and goals.
If you’re looking to grow your wealth, ISAs are your not-so-secret weapon because they allow you to do this without paying tax on your gains — which could be interest generated from cash savings, or potential profits made from buying and selling investments (depending on the type of ISA you go with).
ISAs (or Individual Savings Accounts) allow you to save and invest a certain amount each tax year (which is known as your ISA allowance), and anything you make from your money will be shielded from income tax, capital gains tax, and any other tax on investments and savings.
But when is the best time to open an ISA if you want to take full advantage of this?
The truth is that time can matter if you want to get the most potential from ISAs. In this blog, we’ll explain how they work, and the things you need to consider when opening an ISA account — such as ensuring you choose the right type for your goals.
However, do keep in mind that tax treatments of ISAs are dependent on individual circumstances, and they could be subject to change in the future, too.
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Why Timing Matters with ISAs
Here's what Jessie Kwok, Wealthify’s Chief Investment Officer, has this to say:
“The timing of opening an ISA can have a notable difference when it comes to growth over time.
“Using your ISA allowance as early as possible in the tax year gives your money a longer timeframe to potentially grow, especially when you take compounding into account. This is when the profits from your original deposit are kept in the account and go on to make their own gains.
Put simply, you’re not just earning interest or investment profits from the money you’ve paid in — they can come from any funds you have in your pot. And these won’t eat into your ISA allowance.
“Because of this, waiting too long to start using an ISA could mean you lose out on crucial months of potential tax-free growth.”
If you’re unsure of how your ISA allowance works and how much it is, then keep reading below.
When does the ISA allowance reset?
Your ISA allowance resets at the beginning of the new tax year, which is 6th April. This means you have until the end of 5th April to make the most of your current allowance before it refreshes, and anything leftover won’t be carried over.
Like many things, it’s a use it or lose it situation.
But what is the current ISA allowance? For 2025/26, it’s £20,000, and you can spread this however you like across the different types of ISAs — so you could use it in one Stocks and Shares ISA, two different ones, or even one Stocks and Shares ISA and one Cash ISA (as an example).[1]
However, please note that you can only deposit up to £4,000 into one Lifetime ISA each year. You’ll also get a separate allowance of £9,000 per child to use in Junior ISAs for your little ones.[2]
Tax free growth
The biggest advantage of opening an ISA account is that it allows you to grow your money tax-free.
After all, interest from savings and gains from investments are classed as income, so are subject to tax if they hit a certain threshold — and this can eat considerably into your profits. But you don’t need to worry about this with ISAs.
And as our Chief Investment Officer, Jessie, has explained, paying into an ISA as soon as possible can mean your money has even more potential to grow due to compounding.
As a reminder, this is when the interest you earn on savings or gains from investments are kept in the account and reinvested, accelerating growth by allowing them to generate even more returns over time. Just think of it like a snowball rolling down a hill, which gets bigger and bigger as it picks up more snow along the way.
So, when it comes to the question, “when is the best time to open an ISA?” Doing this as early as possible could make your money work much harder for you.
You may need different accounts for your different goals
Things are rarely ‘one size fits all’ — and when it comes to opening an ISA, you’ll want the one you choose to align with your financial circumstances and goals.
For short-term savings (like an emergency fund to cover repairs and a loss of income, or savings for things like an annual holiday or MOT), you may want to consider an easy access savings account that doesn’t charge you for withdrawals — like our Instant Access Savings Account or Cash ISA.
For savings you won’t need to spend in the near future (at least five years), investing in our Stocks and Shares ISA could give you a chance to make bigger gains than with a savings account paying a low interest rate. Investment performance can go up and down, but committing for longer could give you more time to recover from market dips (which are normal to experience).
If you’re saving for your first property, are under 40, and aren’t planning to buy for at least 12 months, then a Lifetime ISA (LISA) could be a good choice as you’ll get a 25% top-up on what you pay in. We don’t offer these at Wealthify, but you can learn more about Lifetime ISAs here.
To put money away for your children, you might want to consider a Junior ISA, as any money paid in belongs to them and is locked away, ready for them to access at age 18. With our Junior Stocks and Shares ISA, the money is invested to give it more potential to grow — and you can even invite your friends and family to pay into the account too.
How to open an ISA online
One of the great things about ISAs is that you don’t have to walk into a physical bank to start one. There are a number of providers that allow you to quickly open an ISA online, from the comfort of your own home.
At Wealthify, it’s as simple as this:
- Visit our website and choose a Stocks and Shares ISA, Cash ISA, or Junior Stocks and Shares ISA.
- Tell us some details about yourself and how much you want to put into your new Wealthify ISA. If it’s a Stocks and Shares ISA or Junior ISA, you’ll need to pick an investment style, then take our suitability quiz to find a risk level that’s right for you. We’ll then build you a portfolio and manage it for you, making changes as and when necessary to help keep your performance on track.
- If you chose a Cash ISA, your account will start to earn interest as soon as it’s open.
- Once you’re all set-up, log into your online dashboard (via our website or app) to see how your ISA is performing at any time, and easily top-up your account whenever it suits you.
So, when is the best time to open an ISA? Thanks to compounding, as soon as possible if you want to give your money the most potential for growth.
And if you’re ready to open an ISA online, why not consider Wealthify? We have a variety of accounts to help you achieve your financial goals — whether that’s a Cash ISA for your short-term savings, a Stocks and Shares ISA for longer-term investing, or even a Junior ISA to build a nest egg for your little one.
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
With investing, your capital is at risk, so the value of your investments can go down as well as up, which means you could get back less than you initially invested.
Wealthify does not provide advice. If you’re not sure whether investing is right for you, please speak to a financial adviser.
