From this tax year - 2024/2024 - UK residents can choose to open multiple ISAs across the same or different product types, as long as they stay within the total ISA saving limit for the tax year.
This is useful if you’re not sure which ISA type or provider you’d like to use, or if you’d prefer to split out your annual savings or investments across multiple ISA types. Read on for all you need to know.
What are the different types of ISA?
UK residents can choose to open ISAs across 4 key types:
- Cash ISA
- Stocks & Shares ISA
- Innovative Finance ISA
- Lifetime ISA
There are also Junior ISAs which can be opened by an adult in the UK, on behalf of a child under 18. The different ISA types work in their own ways, allowing you to save and invest flexibly and efficiently from a tax perspective.
You don’t need to pay tax on interest, dividends or capital gains for assets held in an ISA. However, the amount you can pay into an ISA annually is limited by the government. The 2024/2025 ISA limit is £20,000, and of your annual allowance you can choose to add up to £4,000 to a Lifetime ISA. This is because lifetime ISAs work a bit differently to the other ISA classes, and can qualify you for an extra bonus payment from the government.
Should I have multiple ISAs?
The different types of ISA allow you to hold different types of assets - which can be an appealing option when building a balanced and diverse portfolio. Putting your money into different ISAs offers the option to invest in stocks and shares, as well as in interest paying savings accounts, for example. This can help to balance risk.
It will also give you choices about which provider to use for any specific ISA type. So, you may decide to hold two cash ISAs with different providers, to access different specific product features; or maybe you want to open different stocks and shares ISAs with a couple of services to increase the number of asset types you can access.
Investing in more than one ISA - in a given tax year or over multiple tax years - can offer a range of ways to test new services and to balance out your investments. However, bear in mind that different ISA products may have their own fees to pay - so having more than one ISA product might also mean paying more fees overall. You’ll want to shop around, and look for ISAs with low costs, to avoid doubling up on fees as you save and invest.
Interested in learning more about how your savings might mount up over time? You can use our ISA Savings calculator to model your potential options and outcomes, and make a start on planning your financial future.
How many ISAs can I have?
From the 2024/2025 tax year, UK customers can open multiple ISAs, including more than one ISA of any given type. This increases the opportunity for diversification across ISA types and providers, and makes it easy to test out different services. You’ll need to keep an eye on costs to make sure you’re not doubling up on the fees you pay to manage your ISAs - but with careful use, holding multiple ISAs could be a choice worth considering for many savvy investors.
Disclaimer
When you invest, your capital is at risk. Terms apply. The tax information provided here is of a general nature, and is not a substitute for specific advice in your own circumstances. Seek guidance if needed.
Charlotte is a Communications Manager at Lightyear. She's been sharing news and insights about the finance industry for over five years. At Lightyear she writes content about: product developments on the platform; data, research and news within the investing space; investing instruments and tools; and how individuals and businesses can grow their wealth.
