Yes- as soon as you add money to your ISA portfolio, it counts towards your annual ISA allowance, even if you haven’t invested it.
You don’t need to invest the cash for it to use up your allowance. Simply holding cash inside your ISA wrapper is enough- this is because HMRC counts contributions, not what you do with them afterwards.
What this means in practice
For example:
- If you pay £5,000 into your ISA and leave it as cash, you’ve still used £5,000 of your £20,000 allowance
- If you later invest that cash into ETFs, the amount used doesn’t change
- If you withdraw cash from your ISA, your allowance doesn’t reset unless you replace the funds within the same tax year (under Flexible ISA rules)
Learn more about Flexible ISAs here.
A few important things to bear in mind
- ISA cash doesn’t earn interest at InvestEngine, so leaving large amounts uninvested for long periods may limit your potential growth
- Your ISA allowance is "use it or lose it" each tax year- but using it on cash alone might not make the most of it
- If you’re unsure how or when to invest, tools like AutoInvest or a Savings Plan can help you stay on track
Check out our guide on whether cash in your ISA needs to be invested here, for more about your options.
Where can I check how much I’ve used?
If you log into your InvestEngine account and go to your Dashboard. You’ll be able to see:
- Your remaining ISA allowance for the current tax year
- Your 'flexible' allowance (if you’ve withdrawn funds and are eligible to put them back)
Why leave cash uninvested?
There’s no requirement to invest straight away- and your ISA will still protect any cash you hold from tax.
Some investors:
- Keep cash ready for market opportunities
- Prefer to stay flexible with their timeline