There are six distinct types of ISA, meaning the savings system has got complicated. Understandably people might want to have more than type of ISA, but is that possible, which ISAs can you use together, and how much can you pay into each? Let us look at a few scenarios.

Scenario 1

I put £1,000 in a Cash ISA in January. If I put another £1,000 in the Cash ISA on 1 June, can I also put £3,000 into a Lifetime ISA this tax year?

You can pay up to £4,000 a year into a Lifetime ISA but this counts as part of your overall £20,000 ISA allowance. It means if you make the maximum Lifetime ISA subscription you could put up to £16,000 into your other ISAs that tax year. In this example you have paid £1,000 into your Cash ISA last tax year and will pay another £1,000 into it this tax year.

Assuming you have not made any other ISA subscriptions this tax year that means you have £19,000 of allowance left, so the £3,000 going into your Lifetime ISA will be within that (you could pay in £4,000 if you had the spare cash to do so). This is the case whether the Lifetime ISA is a cash or Stocks and Shares version of the ISA.

Scenario 2

I put £4,000 into a Lifetime ISA on 1 May. Can I put £2,000 into a Stocks & Shares ISA on 1 July?

In this example you have maxed out your Lifetime ISA allowance for the current tax year, by making the full £4,000 payment on 1 May. However, that does not stop you subscribing to other ISAs in the same tax year, so long as you do not exceed the overall £20,000 ISA allowance. So, in this example you could put up to £16,000 in your Stocks and Shares ISA this tax year, assuming you have made no other subscriptions.

Scenario 3 

I have £2,000 in an ISA with Provider X that I have not topped up since 2020. I want to open a new ISA with Provider Y and deposit £1,000. By opening that account, what does that mean for the money I have got in my old ISA with Provider X?

You cannot open and pay into two types of the same ISA in the same tax year. For example, you can open and pay into a Cash ISA and a Stocks and Shares ISA in the same tax year, but you cannot pay into two Cash ISAs in the same tax year. However, if you already have an ISA open that you paid into in a previous tax year, you do not have to close that when you open your new ISA.

In this scenario you can keep your £2,000 in your old ISA and open a new ISA to pay in the £1,000. You do need to make sure that you do not pay any further money into the old ISA in the same tax year. If you accidentally pay into more than one in a year, do not attempt to fix it yourself, as you may close the wrong ISA. Instead, call HMRC’s ISA helpline on 0300 200 3300 to get advice on what to do.

If the ISAs in question are Stocks and Shares ISAs then you can still buy and sell investments in the old ISA and take money out of it, you just cannot pay any more money in if you are paying into another ISA of the same type. However, there is nothing to stop you paying money into the old ISA in a future tax year, so long as you are not paying into two in the same year. You could also opt to transfer your old ISA into your new ISA, and either move all or part of the money across to the new account.

Scenario 4 

I have already paid £2,000 into my Stocks and Shares Lifetime ISA in the current tax year, can I pay another £2,000 into my Cash Lifetime ISA in the same tax year?

The Lifetime ISA has a Cash option and a Stocks and Shares option. On the face of this, this looks ok, you are splitting your annual £4,000 Lifetime ISA allowance in two and you are paying half into a Stocks and Shares version and half into a cash version. However, it is not allowed. All Lifetime ISAs are counted as one type of account, whether they are Cash or Stocks and Shares, meaning that you can only pay into one in a tax year. It means you will need to pick between cash and Stocks and Shares for your Lifetime ISA savings. In this example, because you have already paid into your Stocks and Shares Lifetime ISA this tax year you cannot open or pay into the Cash version this year.

You can open more than one type of Lifetime ISA in your lifetime, but only one per tax year. That means this individual could open a Cash Lifetime ISA next tax year and pay into that then. However, to open a new Lifetime ISA, you will need to meet the eligibility criteria, of being aged 18 to 39 – so if you have hit your 40th birthday you are out of luck.

Scenario 5 

I paid £2,000 into a fixed-rate cash ISA in May this year, but now rates have risen and I want to put another £2,000 into a different fixed-rate Cash ISA, can I do this?

Even if you are picking two different fixed rate accounts from two different providers, they are both Cash ISAs and so you would not be able to pay into both in the same tax year. This is also the case if you had already opened and paid into a fixed-rate Cash ISA and then wanted to open an easy-access version.

But there are a couple of exceptions. The first is that you can usually pay money into a fixed-rate account in the first 30 days of the account opening. If you opened the account less than 30 days ago you could add more money to the account, but it would be at the same interest rate as you were previously getting. The other option is to see if the Cash ISA provider offers a split ISA, this is where you can have an easy-access and fixed rate Cash ISA option in the same year, so long as they are both with the same bank. There are a few providers of this, including Nationwide, Natwest and the Post Office.

At a glance: what are the six types of ISA?

Stocks and Shares: an investment option.

Cash: for easy-access or fixed term cash accounts.

Lifetime ISA: provides a 25% Government bonus and can be used towards a first home or for retirement, applications are open for 18–39-year-olds, with bonuses paid on subscriptions made up to (and including) age 49 and has a £4,000 annual limit.

Junior ISA: Comes in cash and Stocks and Shares version, for those under the age of 18 and has an annual limit of £9,000.

Innovative Finance ISA: for investments in the peer-to-peer lending industry.

Help to Buy ISA: now closed to new customers, but existing customers can still use them. Can pay in up to £200 a month and the Government tops up with a 25% bonus (up to £3,000) when you buy your first home.

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