How many ISAs are you allowed?

For example, if you have opened a Cash ISA with Virgin Money in the tax year running from 6th April 2019 to 5th April 2020, you could not open another Cash ISA with Shawbrook Bank (or any other provider) in the same tax year. You would have to wait until the start of the new tax year on 6th April 2020 to put money into any other Cash ISA with a different provider.

The same rules apply for the three other main types of ISA - the Stocks and Share ISA, Innovative Finance ISA (IFISA) and Lifetime ISA.

What about transfers from other ISAs?

You can transfer funds from ISAs set up in previous years, providing you don't top up those particular ISAs further. 

Remember - your annual ISA allowance is set by the government each year. The current annual ISA allowance for the 2020/2021 tax year is £20,000.

Can I open more than one type of ISA in the same tax year?

Yes - if you're over 18 years old you can, if you wish, open a combination of the following;

• Cash ISA
• Stocks and Shares ISA
• IFISA
• Lifetime ISA (which is subject to a £4,000 annual limit in the 2020/21 tax year)

The combination could include two, three or all four of the above. This can be particularly useful for savers and investors who want to build a diversified ISA portfolio. 

You can, for example, open a Cash ISA, Stocks & Shares ISA and IFISA every tax year if you want. However, it's very important that the total combined contributions to each account don’t exceed the £20,000 annual ISA allowance.

To ensure you stay within the annual ISA limit, you could, for example, split your allowance as follows;

• Cash ISA = £5,000
• Stocks and Shares ISA = £5,000
• IFISA = £10,000

More cautious investors may choose to invest the whole £20,000 annual allowance into a Cash ISA. However, with the best Cash ISA rates paying just over 1% per annum, more experienced investors are considering the Stocks and Shares ISA and IFISIA in search of higher tax free returns.

Remember - a Cash ISA is a savings product, meaning interest rates are low but your savings are protected for up to £85,000 by the Financial Services Compensation Scheme (FSCS). On the other hand, the Stocks and Shares ISA and IFISA are investment products. Both have the potential to generate significantly higher returns than a Cash ISA, but as with all investment products your capital is at risk and returns are not guaranteed.

I have a number of different ISAs, can I pay into more than one in the same tax year?

Yes. If you have opened a number of different types of ISA over previous years, you can pay into one of each type in any one tax year.

You can divide your £20,000 annual allowance (as of 2020/21) in any proportion you like, across one of your existing Cash ISAs, Stock and Shares ISAs and IFISAs. 

I have too many ISAs, can I transfer and consolidate? 

You can keep your old ISA accounts along with any new ones you open. However, you won’t be able to pay into them as they will become inactive. When the new tax year starts you can choose to either keep your current ISA active, or you can make your ISA inactive and open a new one.

An option may be to transfer and consolidate your ISA portfolio. Whilst there may be transfer fees, this may be offset by potentially higher returns and lower fees (or no fees) with a new provider.