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ACCA Strategic Professional · Advanced Taxation (UK) · Income tax: property and investment income

Mia, a UK resident, wishes to invest in an individual savings account (ISA) for 2025/26. Which statement correctly describes the ISA subscription limit given in the ATX-UK tax rates and allowances?

The overall ISA investment limit is £20,000 per tax year. It applies in total across all ISAs the individual subscribes to, not separately for each type, and it does not depend on the taxpayer's income or tax band.

  1. AThe overall investment limit is £20,000 across all ISAs subscribed to in the tax yearCorrect
  2. BThe limit is £20,000 for each separate type of ISA, so £40,000 may be put into two ISAs
  3. CThe overall limit is £20,000 for a basic rate taxpayer but £10,000 for a higher rate taxpayer
  4. DThe limit is 25% of Mia's income or £20,000, whichever is the higher

Explanation

The tax rates and allowances state that the overall ISA investment limit is £20,000. It is an overall limit across ISAs, not a limit per type, and it does not vary with the rate of tax paid or with income. Option B wrongly multiplies the limit for each ISA type.

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