Most investors know all about the ISA allowance, which is £20,000 for the current tax year. But did you know there are limits on what ISAs you can pay into, and when? Read on to learn more.
Can you have more than one ISA?
Each tax year, you can split your annual ISA allowance of £20,000 between the different types of ISA you’re eligible for. That can include a Stocks and shares ISA, Cash ISA, Lifetime ISA or Innovative Finance ISA.
Just remember – a Lifetime ISA has its own limit of £4,000, which sits within your overall allowance.
You can even pay into multiple Cash, Stocks and shares or Innovative Finance ISAs in the same tax year, if you stay within the overall ISA allowance. There’s still restrictions on multiple Lifetime ISAs or Junior ISAs.
Over time, you could easily end up with many different ISAs with different providers, even if you stick to the same type of ISA. There’s no limit on the number of accounts you can open in your lifetime, but obviously the more accounts you open, the harder it will be to manage them.
Cash ISA vs Stocks and shares ISAWhat about multiple Lifetime ISAs?
Although you can hold a Lifetime ISA in cash or in stocks and shares, a Lifetime ISA is classed as one type of ISA. The rules for multiple ISA accounts allow you to only pay into one Lifetime ISA each tax year, but you could still open a new Lifetime ISA with a different provider in a new tax year.
Are the rules different for Junior ISAs?
The rules for multiple Junior ISAs are stricter than for adult accounts. A child can only hold up to two Junior ISAs (one of each type, cash or stocks and shares) at any one time through their childhood. You can only open a Junior ISA of the same type on your child’s behalf only if you’re going to make a full transfer of their existing ISA first.
Which ISA is best?
Important information: ISA rules apply. Remember that the value of investments can change, and you could lose money as well as make it. We don't offer advice, so it's important you understand the risks. If you're not sure, please speak to a financial adviser. Past performance is not a guide to future performance. These articles are for information purposes only and are not a personal recommendation or advice.
An AJ Bell Stocks and shares ISA is an easy, efficient way to invest. It’s completely tax-free, so more of what you make stays in your pocket.
No matter where you are in your investing journey, our learn hub is here to help you feel good, investing.
Written by:
Charlene Young
Charlene Young is AJ Bell’s Pensions and Savings Expert. She joined AJ Bell from a wealth management firm where she worked with private clients and small businesses as a financial planner. Charlene holds Chartered Financial Planner status and is an associate member of the Society of Trust and Estate Practitioners (STEP).
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