As well as answering the main question ‘How Many ISAs Can I Have’ this article also covers the following:

1. What Is An ISA Investment?

2. How Many ISAs Can I Have?

3. Types of ISA

4. Accessing or Transferring ISAs

1) What is an ISA Investment?

If you are a UK resident, Individual Savings Accounts (or ISAs) are a tax-efficient way to save. As long as you keep within your ISA allowance each year, your money is shielded from:

  • Income Tax

  • Tax on dividends

  • Captial Gains Tax

More information can be found on

2) How Many ISAs Can I Have?

Each year the Government sets a tax free ISA allowance. The total personal ISA allowance, for the present tax year (2023/2024) is £20,000.

There are several different types of ISA, which you choose will depend on eligibility criteria along with your individual circumstances, attitude to risk and your financial goals.

How many ISAs and the sum of money you invest each year, in whatever combination you decide to invest it (e.g. Cash ISA, Stocks & Shares ISA, Innovative Finance ISA etc) must not exceed your full ISA allowance for that same tax year.

From 6th April 2024, you are able to open multiple ISAs of the same type in a single tax year, using different isa providers. This means you can take advantage of better deals as they come onto the market, making your tax free savings work harder for you.

There are also a few specific limits that apply to certain types of ISA. For example, the maximum annual contribution to a Junior ISA for 2023/2024 is £9,000 per child, no matter where the contributions come from.

3) Types Of ISA

  • Cash ISAs

    Under the current rules (as at February 2024) you can pay into a Cash ISA account from the age of 16. However, from 6th April 2024, the minimum age is increasing to 18 & over.

    A Cash ISA is similar to a normal savings account, except no tax is payable on the interest you earn. You can make a single or regular contributions as long as you keep within the annual ISA allowance and the return on your investment will depend on whether you want instant access or are prepared to lock your money away for a fixed term.

  • Stocks and Shares ISAs

    Also known as investment ISAs, stocks and shares ISAs are a tax efficient way to invest in wide variety of stocks and shares including equities, bonds or commercial property. You can choose to invest in a ready made ‘fund’ or research and select your own shares to buy.

    Important Note: Whilst a Stocks and Shares ISA has the potential for higher growth than a standard Cash ISA, the risk is also higher as the value of stocks and shares can go up as well as down.

  • Junior ISAs

    Specifically for children under the age of 18, maximum annual alowance (as at 2023/2024) £9,000 per child.

    Grandparents / Parents often choose to open a Junior ISA as the child cannot touch the money until they reach 18. The investment can be in the form or cash, or stock & shares. Once the child reaches 18, it will convert into a standard ISA.

  • Lifetime ISAs

    A Lifetime ISA can be opened by anyone over 18 up to the age of 40. Maximum annual allowance (as at 2023/2024), £4,000.

    Designed to help you save your first home or for your retirement. Contributions can be made until you reach 50, but withdrawals, without penalty, can only be made to buy your first home, or which you reach 60.

    The Goverment add a 25% bonus to your savings up to a maximum of £1,000 each year (on a monthly basis), until your reach 50.  Again, the investment can be in cash or stocks and shares.

  • Innovative Finance ISA

    This type of ISA allows individuals to make peer-to-peer lending investments within a tax-free wrapper.

    So you’re able to invest in peer-to-peer lending platforms without paying capital gains tax on your returns.

    If you invest in P2P lending you may get a better interest rate than through a high street bank savings account. But the risks are greater, too. If the ‘peer’ you lend to doesn’t perform as expected, you could bear the brunt of any losses, and those losses are final if they default on a payment.

    Liquidity can also be an issue if you want to withdraw money before the end of the term of the loans you’ve made.

    Innovative Finance ISAs aren’t currently backed by the Financial Services Compensation Scheme (FSCS), so you may want to approach these ISAs with caution.

  • The Help to Buy ISA

    The Help to Buy ISA was a type of cash ISA. It was a government scheme to help first-time homebuyers save for a mortgage deposit to buy a home. The scheme closed to new accounts at midnight on 30 November 2019.

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4) Accessing or Transferring ISAs

Can I transfer or consolidate my existing ISAs?

Yes, you can transfer money from one ISA to another as long as it is allowed within the product terms and conditions.

Note: Transfers from investments made in previous years can be done in part or full, whereas isa transfers from any money invested in the current tax year, must be for the full amount.

What happens to ISA funds if I die?

ISAs retain their tax benefits after you die, until they’re closed. An added benefit is that your spouse or civil partner can inherit the value of your ISA as a one-off additional tax-free allowance.

If no spouse or civil partner, your ISA will end when either:

– your executor closes it

– the adminstration of your estate is completed

– Otherwise, your ISA provider will close your ISA 3 years and 1 day after you die.

There will be no Income Tax or Capital Gains Tax to pay up to that date, but ISA Investments still form part of your estate for Inheritance Tax purposes.

When can I access my money and do I pay tax on ISA withdrawals?

ISAs allow you to withdraw money from an ISA at any time, without losing any tax benefits.  The exception to this rule is the Lifetime ISA as your money can only be withdrawn to make a first time house purchase, or if you are saving for retirement, when you reach 60.

In order to attract a higher rate of return, some ISAs tie your money up for a specific period of time. You will need to check your providers Terms and Conditions to see if there are any access penalties and/or fees.

In Summary

Investors often choose ISAs as a tax efficient wrapper for their savings and investments but there are many areas to explore.

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