In short
The 1p ISA loophole is the trick of paying a token amount into your ISA in the new tax year to keep it open for further subscriptions and prevent it being treated as a previous year ISA only.
The current ISA annual allowance is £20,000 across cash, stocks and shares, innovative finance and Lifetime ISAs combined. Lifetime ISA payments are capped at £4,000 of that total.
Following changes that took effect from April 2024, savers can now subscribe to multiple ISAs of the same type in a tax year. The 1p trick matters less than it did, but is still useful for some account types and provider rules.
Last reviewed: 27 May 2026
The so called 1p ISA loophole has been circulating on social finance forums for years. The idea is simple: at the start of a new tax year, pay a token amount, even one penny, into your existing ISA. That keeps the account open as an active current year ISA and means you can pay more in later without having to open a new wrapper or transfer the balance.
After the April 2024 ISA rule changes, the trick is less critical for most savers because you can now subscribe to multiple ISAs of the same type in one tax year. But there are still situations where a token contribution at the start of the year keeps your options open, particularly with specific providers and account types.
What the 1p ISA loophole actually is
An ISA is a tax wrapper, not a single account. Every tax year (6 April to 5 April the next year) you have a fresh £20,000 ISA allowance to use across cash, stocks and shares, innovative finance and Lifetime ISA accounts.
If you do not pay anything into a particular ISA in a tax year, that ISA still exists and the money inside still grows tax free, but it is treated as a previous years ISA for that wrapper. Some providers historically restricted further subscriptions to an account that had not been topped up that tax year, or required you to fill out a fresh declaration.
Paying a small amount in, even just 1p, ensures the account is treated as a current year ISA. That keeps the door open for future top ups in that same tax year without paperwork hurdles, particularly for cash ISAs with rate switching tiers.
How ISA tax-year rules work
The annual ISA allowance for the 2026 to 2027 tax year is £20,000. You can split it across cash, stocks and shares and innovative finance ISAs as you choose. The Lifetime ISA carve out is £4,000, and the 25% government bonus on those Lifetime ISA contributions adds up to £1,000 of free money each year if you are eligible.
From 6 April 2024 you can pay into multiple ISAs of the same type within a tax year, as long as the combined total stays within the £20,000 allowance. You can also do partial transfers of current year money between providers.
Junior ISAs have a separate £9,000 allowance for under 18s. The Junior ISA is in the child's name and they take control at 18.
When the 1p trick helps and when it doesn't
Where the 1p trick still helps: fixed rate cash ISA providers that close the account to further subscriptions after the initial deposit window, providers that need a current year subscription before allowing partial transfers in, and Lifetime ISA holders who want to ensure their wrapper remains active even in a year where they are unsure about a full £4,000 contribution.
Where the 1p trick is now mostly redundant: easy access cash ISAs and stocks and shares ISAs with most major providers since April 2024 because the multi ISA rule means you can subscribe to another ISA of the same type instead.
When in doubt, check the provider's terms. Each ISA provider sets its own rules about minimum subscription per year, partial transfers and account state.
The alternatives if you can't afford a full contribution
Set a monthly direct debit into the ISA, even a small amount. Many cash ISAs accept any standing order amount. Stocks and shares ISAs often have £25 or £50 monthly minimums.
Use the Help to Save scheme if you are on a means tested benefit. Help to Save is a separate government savings scheme outside the ISA wrapper. It pays a 50% bonus on amounts saved up to £50 per month, capped at £1,200 over four years.
If you have a Lifetime ISA but cannot fund it this year, the wrapper still earns the 25% bonus on any future contributions up to age 50, provided you opened the account before age 40.
Common mistakes
Going over £20,000 across all of your ISAs in a tax year. HMRC can void excess subscriptions and tax the income on the excess. Track total payments yourself if you have more than one ISA.
Withdrawing from a cash ISA and paying back in. With a flexible ISA, the withdrawn amount can be paid back in the same tax year without using new allowance. With a non flexible ISA, the put back amount counts as new subscription. Check whether your ISA is flagged as flexible.
Transferring incorrectly. Always use the receiving provider's transfer in process. Withdrawing and re depositing loses the ISA wrapper.
Frequently asked questions
Is the 1p ISA loophole legal?
Yes. There is no minimum or maximum to a single subscription so long as you stay within the £20,000 annual allowance. The 1p approach is a planning trick, not a tax dodge.
How much can I put into an ISA in 2026 to 2027?
Up to £20,000 across cash, stocks and shares, innovative finance and Lifetime ISA accounts combined. The Lifetime ISA carve out is £4,000 of the total.
Can I have more than one cash ISA in the same tax year?
Yes, from 6 April 2024 you can subscribe to multiple ISAs of the same type within one tax year, subject to the combined £20,000 allowance.
Does the 1p trick affect interest or returns?
No, the size of the contribution does not affect the underlying interest rate or return on the wrapper. It only affects the account's status as a current year ISA.
Where can I check the latest ISA rules?
Gov.uk publishes the official ISA guidance. HMRC's Individual Savings Accounts page is the primary source. MoneyHelper has plain language guidance.
Related guides
- Individual Savings Accounts (gov.uk)
- Personal Savings Allowance (gov.uk)
- Savings guidance (MoneyHelper)
- Consumer guidance (FCA)
