How Many ISAs Can You Have?

It doesn’t matter how old you are, or at what point in your life you’re at. Savings are always important to have. As we’ve seen from 2020 so far unexpected things are just around the corner. And it’s even more important to have money stashed for emergencies, your future, or a holiday/ car. Over the years I’ve had a fair few ISA as I find them a great savings tool. There are lots of different types of savings accounts you can open, and multiple different ISAs in that. I did wonder how many ISAs can you have before I did some investigating. But here’s some information on ISA’s themselves and an answer to how many you can have.

What is an ISA and who can open them?

A cash ISA works in pretty much the same way as an ordinary savings account, but you don’t pay tax on the interest you earn. Tax is currently paid on any interest earnings over £1,000. You may not be earning that much interest now but you may in the future. And adding money to an ISA makes it tax-free for life.

ISA’s generally allow you to get much better rates than traditional savings accounts. But do your research and search around for the best deal depending on what kind of ISA you need. More on what and how many ISAs can you have further down.

If you’re a UK resident over 16 years old then you can open an ISA. Although junior ISA’s are available for younger children. You can open them at most banks and buildings societies including my favourite Monzo!

Are there any limits to an ISA?

The annual limit to add to cash and stocks and shares ISAs combined is currently £20,000 a year. So you can’t put more than that in your ISA’s combined, so even if you have multiples it’s not per account. If you have a Lifetime ISA you can only put up to £4,000 a year into this type of ISA. But you can choose to put the remaining £16,000 into another type of ISA.

There are some new flexible ISA rules so if you withdraw money from a cash ISA you can replace that money without affecting your allowance. For example, if you put the full £20,000 into an ISA and then withdraw £2,000 you can pay this £2,000 back without exceeding your limit.

How many ISAs can you have?

The main answer to the question ‘How many ISAs can you have?’ is as many as you want. But you can only open one cash ISA in each tax year. So, if you opened a cash ISA after 6th April 2020, you can’t open another one until the tax year ends next April.

I have opened quite a few ISA’s over the years with a cash ISA last year to save for our wedding. Then I have just opened a stocks and shares ISA to save towards my future and retirement.

You can transfer funds between ISAs if you find a higher rate of interest somewhere else. But you need to check if your current provider will charge you a penalty for moving your money.

What are the different types of ISAs?

You can open an instant access cash ISA where you can easily access your money and withdraw anytime you want, but generally, these have the lowest rates of interest. Some ISAs pay you a fixed rate of interest for a certain length of time. For example, it may pay you a 3% interest fixed for three years. These can be great if you’re doing long term savings but be prepared to lock your money away. Especially as there’s usually a penalty for early withdrawal.

Help to Buy ISAs launched in December 2015 to help first-time buyers but are no longer available to open. If you have one of these you could save £1,200 in your first month and up to £200 a month after that. This money would be used towards your first home where the government would add a 25% bonus (up to £3,000) to help you buy a property.

A Stocks and Shares ISA is what I have just opened and it’s great for investing. You can invest in funds (shares/ bonds) but they’re managed by an online service so you don’t need to worry about buying and selling. This is a more risky kind of saving but you can generally choose your risk level. I chose a medium risk as I’m planning on leaving the investment for a long time so can afford a bit of risk.

The Lifetime ISA (LISA) launched in April 2017 where you can save up to £4,000 a year either as a lump sum or over the year. Much like the help to buy ISA the government would add a 25% bonus on top. So if you saved £4,000 you would get £5,000 back. And that’s before interest. As it’s a lifetime ISA the bonus is paid when you hit 50 as a monthly bonus.

There are also innovative finance ISA’s which include property, peer-to-peer lending, and crowdfunding but I don’t know how much about these types of ISAs.

Do you have any ISAs?

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