How Many ISAs Can I Have? (2024)

Prior to the 2024/25 tax year, you could take out multiple ISAs in any given tax year, with the proviso that you could only pay into one of each type (cash, stocks and shares, Lifetime, or Innovative Finance). And you were not allowed to exceed your overall £20,000 annual ISA allowance.

This changed from 6 April 2024, when new rules mean you can open multiple ISAs of the same type within the same tax year. The total amount you can invest in ISAs in the current tax year remains at £20,000.

Here’s a run-through of the main types of ISA, how they work, and how many you can have.

What is an ISA?

An ISA is a tax-efficient wrapper. You can use this each year to shelter a certain amount of money – your annual ISA allowance, as set by the government – from income tax, tax on dividends, and capital gains tax.

You can open an ISA or ISAs each tax year, so you can have multiple accounts with different providers. ISAs from previous years remain open and active provided you stick within the rules outlined below.

If you have questions about the tax rules for ISAs, you can call the ISA helpline.

The annual ISA allowance stands at £20,000 for the tax year 2024/25.

There are five types of ISA:

• Cash: available from banks, building societies and National Savings & Investments
• Stocks and shares: available from fund managers, online investment platforms/stockbrokers
• Lifetime: available from various financial institutions/savings providers
• Junior: taken out on behalf of children, available from various financial institutions/savings providers
• Innovative Finance: available from peer-to-peer lenders

And a new ISA –the British ISA– was also announced in the2024 Budget. It will allocate a further £5,000 tax-free allowance for investment in UK equities (outside an ISA, the purchase of stocks or marketable securities is subject to stamp duty at the rate of 0.5%). This is in addition to the current £20,000 tax-free allowance. The British ISA is in consultation phase until June 2024.

Your age determines the type of ISA that you can take out. Under current rules, you’re eligible for a cash ISA at 16. But you need to be at least 18 to start a stocks and shares version.

For Lifetime ISAs, you need to be between the ages of 18 and 39 to open an account.

Children up to the age of 15 can have a junior ISA opened on their behalf. Between the ages of 16 and 17, they’re allowed to open this sort of ISA themselves.

To take out an ISA, the general rule is that you need to be a UK resident. ‘Crown servants’ such as diplomats, however, can open an ISA even when they are based overseas.

How do ISAs work?

ISAs work like many other savings and investment products – they just impose a few extra rules.

It’s up to you how you allocate your ISA allowance. For example, you may decide to allocate an amount up to the full £20,000 into a cash ISA during a particular tax year.

Alternatively, you could spread your money, up to £20,000, across the several ISA types mentioned above. Thus, if you had the full whack, you might opt to save £10,000 in a cash ISA, £3,000 in a stocks and shares ISA, £3,000 in an innovative finance ISA and £4,000 in a lifetime ISA.

Note that you can only save up to £4,000 each tax year into a Lifetime ISA. And if you’re opening a junior ISA for a child, the limit for that individual is £9,000 per tax year. This amount does not count to your own ISA allowance for the year.

ISA rules from 6 April 2024 mean that from the current tax year (2024/2025), you’ll be able to open and pay into multiple ISAs of the same type, in the same tax year.

“Use it or lose it”

It’s important to understand that if you don’t use your full ISA allowance within a tax year, you can’t carry forward the unused allowance to the next.

However, some ISAs are marketed as ‘flexible’. This means you have the freedom to withdraw your money from an account and put it back in again, without affecting your annual allowance.

Switching ISA providers is also allowed, but you have to transfer the money directly from one ISA provider to another. If you withdraw money and lodge it in another type of savings account elsewhere prior to moving it back into an ISA, you will affect your ISA allowance for that tax year.

Once you’ve opened an ISA, you don’t need to do anything else for the money within the wrapper to benefit from tax-free status. Investors are not required to report their ISAs on self-assessment tax returns, either.

Multiple ISAs and what to do with them

If you’ve already taken out an ISA in a previous tax year, you don’t need to pay into the same one during the present tax year.

For example, you may have already taken out one cash ISA with a particular provider but spotted that, with the change in tax year, a rival is now offering a similar account paying a better rate.

In this situation, you can open a new ISA with the second provider without having to close your old account. Do this a number of times over several years and it’s possible, of course, to end up with a collection of ISAs.

If your record keeping is not great, it’s probably more manageable to aim for a smaller number of ISAs. In which case, it’s common to transfer from one ISA account to another, or to consolidate a number of ISAs in one account.

If you’re moving money saved in a previous tax year, you can decide whether to move all or part of it to a new ISA without affecting your ISA allowance for the current tax year. To move money already paid into a new ISA in the current tax year, you’re obliged to move all of it.

Note that not all ISAs accept transfers, so it’s worth checking with a potential provider before signing up.

Moving funds from one ISA to another doesn’t use up any of your annual allowance. But when transferring ISAs, it’s important that you don’t close an old account and withdraw the money before putting it into a new account. Do this and you’ll lose the tax benefits. Instead, transfer directly from ISA provider to another, without withdrawing.

From 6 April 2024, new ISA rules mean you’ll can open and pay into multiple ISAs of the same type, within the same tax year. From this date, you can also make partial ISA transfers.

How do you know which ISA is right for you?

Ultimately, the right ISA for you will depend on factors such as your attitude to risk and your savings goals. You also need to consider the sort of time frame over which you’re looking to save or invest.

If your aim is to grow the value of your money over a longer period of time (at least five years, but preferably longer) then you might consider a stocks and shares ISA. A markets-based investment such as this would provide you with greater potential to grow your money compared with, say, a cash ISA.

That said, the value of shares-based investments can rise and fall and, in contrast with the return on a cash ISA, it’s possible you’d get back less than you paid in.

Whichever ISA you select, check that your provider is covered by the UK’s financial lifeboat known as the Financial Services Compensation Scheme.

If your ISA provider should collapse, it means that up to £85,000 of your savings or investments will be protected.