New rules mean it’s easier to have more than one
It’s about to get much simpler to use an ISA as restrictions on how many ISAs you can pay into in a year are to be replaced. Here’s what you need to know.
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How many new ISAs can I pay into in a year?
The old rules
Prior to 6 April 2024, the rules were you could only pay new deposits into one of each type of ISA each year. Those ISAs are: Cash, Stocks & Shares, Innovative Finance and Lifetime ISA. Here’s more on each ISA.
So in each financial year you could add money to just one, such as a single Cash ISA or single Stocks & Shares ISA, or a mix of these different types, up to the annual £20,000 cap. But you couldn’t add money to more than one of the same type, so you couldn’t add money to two Cash ISAs for example. You could also add money for a child to a single new Junior ISA, up to it’s own allowance of £9,000 in a year.
The new rules
But that’s changed and from the new financial year you pay into more than one of the same type in the same day, week, month or year for all but the Lifetime ISA and the Junior ISA (we’ll come back to these).
So if you now want to add cash to a mix of Cash ISAs, perhaps some in an easy access and some in a couple of fixed rate accounts, that’s absolutely fine.
And if you want to use different investment platforms for your Stocks & Shares ISAs that’s also all ok. Maybe you’ve an existing portfolio you want to keep adding to, while trying out a different platform for more money.
Can I have more than one ISA with the same provider?
Keeping your cash with the same bank or building society certainly makes it easier to manage. However, it’s up to each provider whether they’ll actually let you open up more than one new ISA with them each year. Since the rules are new, it could take a while for this to become more common.
If they don’t you’ll have to shop around for different accounts, which is never a bad idea anyway. Or you could look for a portfolio ISA where a provider lets you open a single ISA, but within that put your money in different products (though it could be these disappear for new accounts as they’re pretty redundant now).
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Can I put £20,000 in each ISA?
The ISA allowance, which resets every April, is a total of £20,000. This covers all new ISA contributions collectively. This means if you add money to eight different ISAs you must make sure you don’t put more than £20,000 in combined.
There are some exceptions. Within that £20,000 is a sub allowance for the Lifetime ISA. This ISA has a maximum limit of £4,000 that can be added each year. So anything you add to your LISA will reduce the remaining allowance for all the other ISAs you want to contribute to in that year. For example, if you’ve added £2,000 to your LISA, that leave a maximum of £18,000 on any other Cash, Stocks & Shares or Innovative Finance ISAs that year.
Then there’s the Junior ISA which has a separate £9,000 allowance each year. The new British ISA (when it launches) will have a separate £5,000 allowance on top.
Here’s more on the 2024/25 ISA allowances.
Can I have both new and old ISAs?
Yes! Once you open an ISA you can keep it year after year. And each new financial year when the annual £20,000 allowance starts again, you’ve always been able to open up a new one if you wanted. So if you did that every year, you’ll possibly already have quite a few.
You don’t even have to open new ISAs for your new contributions as you can add more cash to existing accounts (as long as that specific account does allow this).
Should I have more than one ISA?
It’s definitely worth considering. For a start, when it comes to new contributions, the new rules also give you the flexibility to have both easy access and fixed Cash ISAs, so you can take advantage of locked in rates while also having some easily accessible money.
Also, remember that your money is only protected in a single financial institution by the Financial Services Compensation Scheme up to £85,000. If you’re likely to go over this then it’s better to split your money across different providers.
However, if you just want a single version of one or more type of ISA, then there’s no harm doing so. Just remember rates do change all the time, especially fixed Cash ISAs once they mature (i.e. when the fixed term ends after say 12 months). Some leading easy and limited access Cash ISAs also come with bonuses in the first year, meaning the rate can drop a lot. And new platforms can launch with lower fees or access to different fund.
So it might be that any older ISAs aren’t the best accounts for your existing and new money. That means it’s worth looking for better paying Cash ISAs or lower fee Stocks and Shares ISAs – and then transferring your money across.
Summary: can I have more than one ISA?
How many Cash ISAs can I have?
You’re able to have and pay into as many Cash ISAs as you want
How many Stocks & Shares ISAs can I have?
There’s no limit to how many Stocks & Shares ISAs you have.
How many Innovative Finance ISAs can I have?
There aren’t actually many Innovative Finance ISAs out there, but if you really want to use them you could contribute to multiple ones in the same year.
How many Lifetime ISAs can I have?
You can only pay new money into one Lifetime ISA (or LISA) each financial year. That includes whether you want a Stocks & Shares LISA and a Cash ISA – it’s sadly one or the other.
But you can open up a new one each financial year if you want to change provider or transfer over existing ones.
The LISA is only available to under 40s, even though you can keep adding money until you are 50. In theory you’re able to open new ones each year after 40, though in practice not all providers let you do this.
Here’s more on how Lifetime ISAs work.
How many Junior ISAs can I have?
As with the LISA, you can only add new money to a single Junior ISA each financial year. And again that means you need to choose each year if you want that to be a Cash or Stocks & Shares version.
Yet as with all other ISA types you can open a new one each April if you do want to mix things up, and contribute to that instead.
You need to take care in consolidating your Cash ISA’s possibly to the one with the highest interest rate. Your highest interest account will probably have the strictest restrictions. eg you can only make one withdrawal. This may be a problem for some if all your money has been transferred to this account. With the New Rules probably better to have several accounts with different conditions to suit your circumstances
Can I add contributions throughout the year on a ‘fixed rate ISA’ rather than an easy access one ??
I will certainly be opening several Stocks & Shares ISAs in the 24/25 tax year. Most of the providers have promotions for opening, making contributions, transfers, TopCashback cashback etc at some point in the year. These come & go and have varying terms but have been difficult to optimise because of the restrictions on funding. Because the changes to allow contributions to multiple ISAs were known well in advance I’ve been keeping track on the incentives offered by various providers over the past year. There’s no guarantee that they will offer the same incentives at the same times of year but it provides a starting point. I’ll also be looking at the new rules for partial transfers as it may be possible to optimise the incentives that way.
I definitely believe it is better to have a mix of cash ISAs rather than putting all your money into a single one at a fixed rate. Then, if you should face an unexpected expense and have to raid one, the interest penalty, if any, will be less than it would be on a larger sum and you will only lose the tax free benefits on a smaller amount.