10 ISA Mistakes to Avoid in 2025
Common Cash ISA errors that cost UK savers money. Learn what not to do.
Millions of UK savers make these ISA mistakes every year. Here’s how to avoid them and maximise your tax-free savings.
Mistake #1: Withdrawing Instead of Transferring
The error: Taking money out of your ISA manually, then opening a new one.
Why it’s bad: You lose the tax-free status on that money forever.
The fix: Always use the official ISA transfer form. Learn how transfers work →
Mistake #2: Not Using Your Full Allowance
The error: Only saving a small amount when you could save more.
Why it’s bad: Unused allowance disappears on April 5th. Gone forever.
The fix: Try to save as much as you can, even if it’s not £20,000. Every pound counts.
Mistake #3: Opening Multiple Cash ISAs in One Tax Year
The error: Opening and paying into more than one Cash ISA in the same tax year.
Why it’s bad: Against the rules. HMRC may void the second ISA.
The fix: You can only open ONE Cash ISA per tax year. (You can transfer old ISAs anytime.)
Mistake #4: Choosing the Wrong Account Type
The error: Putting emergency money in a fixed ISA, or long-term savings in easy access.
Why it’s bad: Penalties for early withdrawal, or missing out on higher rates.
The fix: Match your ISA type to your goals:
- Emergency fund = Easy access
- Long-term savings = Fixed rate
Mistake #5: Leaving Money in Low-Interest Accounts
The error: Never switching ISA providers, even when rates drop.
Why it’s bad: You could be earning 2-3% more elsewhere.
The fix: Review your ISA rate annually. Compare current rates →
Mistake #6: Forgetting the April Deadline
The error: Meaning to save, but not getting around to it before April 5th.
Why it’s bad: You lose that year’s allowance permanently.
The fix: Set a reminder for March. Or better, set up monthly deposits from April.
Mistake #7: Exceeding the PSA Without Realising
The error: Earning lots of interest outside your ISA, then getting a tax bill.
Why it’s bad: Surprise tax payment you weren’t expecting.
The fix: Prioritise ISA savings. Check your total interest across all accounts.
Mistake #8: Not Considering Flexible ISAs
The error: Using a regular ISA when you might need to withdraw and replace.
Why it’s bad: You lose allowance if you withdraw from a non-flexible ISA.
The fix: Consider a flexible ISA if you might need temporary access. Learn about flexible ISAs →
Mistake #9: Ignoring FSCS Limits
The error: Having more than £85,000 with one banking group.
Why it’s bad: Amounts over £85,000 aren’t protected if the bank fails.
The fix: Spread large savings across different banking groups.
Mistake #10: Not Starting at All
The error: Thinking ISAs are too complicated or not worth it.
Why it’s bad: You miss out on years of tax-free growth.
The fix: Start small. Even £50/month in an ISA is better than nothing. Get our free guide →
Quick Checklist
- Use transfer form (not withdrawal)
- Use as much allowance as possible
- Only one Cash ISA per year
- Match ISA type to goals
- Review rates annually
- Beat the April deadline
- Prioritise ISA over regular savings
- Consider flexible ISAs
- Stay under FSCS limits per bank
- Just start!
Final Thoughts
Avoiding these mistakes can mean hundreds or thousands of pounds more in your pocket over time. Tax-free saving is one of the best financial tools available — use it wisely.
Get started right: Download the free ISA cheat sheet
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