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ACCA Strategic Professional · Advanced Taxation (UK) · Taxation effects of the financial decisions made by businesses and individuals

Hannah is a UK-resident basic rate taxpayer with £30,000 to invest in quoted shares. She has already subscribed £12,000 to a cash ISA in 2025/26. Which statement about using her ISA allowance for 2025/26 is correct?

Hannah can invest a further £8,000. The overall ISA limit is £20,000 for the tax year and is shared across all types of ISA, so her £12,000 cash ISA subscription uses part of it, leaving £8,000 for a stocks and shares ISA.

  1. AShe can subscribe a further £8,000 to a stocks and shares ISA, as the overall limit is £20,000Correct
  2. BShe can subscribe a further £20,000 because the limit applies separately to each type of ISA
  3. CShe can subscribe a further £18,000 because the limit applies only to stocks and shares ISAs
  4. DShe cannot subscribe more because only one ISA type may be used each year

Explanation

The overall ISA investment limit is £20,000 across all ISA types, so after £12,000 only £8,000 remains. Income and gains within the ISA are exempt. The other options misstate the limit as separate per type or restrict it.

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