Question 1

How many Cash ISAs can I have?

Accepted Answer

Cash ISA rules have changed a lot in recent years and more reforms are on the way, so if you’re feeling confused about how your ISA works, you’re not alone. Here’s everything you need to know about how many ISAs you can have and how to make the most of your annual allowance.

Question 2

Can you have more than on Cash ISA?

Accepted Answer

You can now have as many Cash ISAs as you like, as long as the total amount you deposit across all your ISAs doesn’t exceed the £20,000 annual ISA allowance. This wasn’t the case a few years ago, when you could only open and pay into one per tax year. It wasn’t until April 2024 that the government introduced a series of updates, making it easier for people to spread their savings between different providers and take advantage of better interest rates. Now, you could save £16,000 into one Cash ISA, and £4,000 into another in a single tax year, helping you to save into different pots for different purposes, or make the most of different interest rates and withdrawal limits.

Question 3

Can I open two Cash ISAs in one year?

Accepted Answer

Yes, under the new ISA rules, you can now open and pay into more than one Cash ISA in a single tax year. That means if you already have a Cash ISA but spot a better interest rate elsewhere, you can open a second one and start saving into it straight away, as long as you haven’t used up your full annual ISA allowance for the current tax year. If you’d rather have just one Cash ISA, you can switch to a new provider by requesting an ISA transfer.

Question 4

Can I have two Cash ISAs with different providers?

Accepted Answer

Yes, you can have Cash ISAs with different providers. In fact, some providers only allow you to pay into one of their ISAs per tax year, so if you want to open another, you’ll need to go elsewhere. Having ISAs with different providers can be useful if: You want to take advantage of promotional interest rates. You prefer to separate short-term and long-term savings. You want to spread your risk across different banks or institutions. If you’re switching your Cash ISA over to a new provider, you’ll need to ask them to complete the transfer for you. If you try to complete the switch yourself by making a withdrawal, your savings may be counted twice towards your annual ISA allowance. Allowing your new provider to complete the transfer for you keeps your funds within their tax-free wrapper.

Question 5

Can I have a Cash ISA and a Stocks & Shares ISA?

Accepted Answer

Yes, you can have both a Cash ISA and a Stocks & Shares ISA at the same time, and even open them both in the same tax year. A Cash ISA is great for short-term goals such as a holiday, wedding, or emergency fund. If you’re saving for long term goals such as retirement, a Stocks & Shares ISA could be more rewarding. Your money will be invested in the stock market, meaning the value of your investments could go up over time. Although over the long term, Stocks & Shares ISAs tend to outperform Cash ISAs, there is no guarantee and the value of your investments could go down, meaning you may get back less than you put in. If you’re saving for a deposit on your first home or retirement, you could also open a Lifetime ISA (LISA) at the same time. You can save up to £4,000 of your annual ISA allowance in your LISA, and the government will boost your savings by 25%. That’s up to £1,000 each tax year! It’s up to you whether you open a Cash Lifetime ISA or a Stocks & Shares Lifetime ISA. Think carefully about what you’ll use the money for before making a decision, as you can only use the bonus from one Lifetime ISA for your first home. If you need to make a withdrawal for anything other than your first home or retirement, you’ll be charged a 25% penalty. Need more flexibility? Stick with a traditional Cash ISA. Withdrawals from a Lifetime ISA for any purpose other than buying a first home (up to a value of £450,000) or for retirement (60+) incur a 25% government penalty, meaning you may get back less than you paid in.

Question 6

Is it worth having two Cash ISAs?

Accepted Answer

In most cases, yes it can be beneficial to have two Cash ISAs, especially now that you can open and pay into multiple Cash ISAs each tax year. Having more than one can help you: Take advantage of higher interest rates by splitting your savings across different accounts or providers. Access your money more flexibly, if one account offers instant withdrawals and another doesn’t. Diversify your savings, spreading risk between different providers. However, make sure you’re not exceeding your £20,000 annual ISA limit, and always check if your accounts have any withdrawal restrictions or notice periods before moving money around. If you prefer simplicity and flexibility, keeping one easy-access Cash ISA might still make more sense.

Question 7

What happens if I accidentally opened two Cash ISAs?

Accepted Answer

You can have multiple Cash ISAs at the same time, so this shouldn’t be a problem as long as you’ve not deposited more than your £20,000 annual ISA limit across all the accounts you hold.

Question 8

What happens if you have more than £20,000 in an ISA?

Accepted Answer

If your total savings across all your ISAs exceed the £20,000 annual allowance, only the first £20,000 you paid in that tax year will qualify for tax-free status. Any amount you save beyond the limit will be treated as standard savings or investments, which means you could pay income tax or capital gains tax on any interest or returns. If you’ve gone over your annual allowance by mistake, contact your ISA provider. The next steps will depend on your provider, but most will transfer any additional deposits above the ISA allowance back into your current account. It can be a good idea to contact HMRC too, as tax may be payable. If you’ve got £20,000 in your ISA, but this has been deposited into your account across different tax years, then you won’t have exceeded your annual ISA allowance. This is because the ISA allowance resets at the start of every tax year.

Question 9

Can I put £20,000 in an ISA and £4,000 in a LISA?

Accepted Answer

No, your £20,000 annual ISA limit includes all types of ISAs you hold, including Lifetime ISAs. So if you put £4,000 into a Lifetime ISA, you can contribute up to £16,000 to other ISAs (Cash, Stocks & Shares, or Innovative Finance) in the same tax year. This means you can still make full use of both allowances, as long as the combined total doesn’t exceed £20,000. For example: £4,000 into a Lifetime ISA (earning up to £1,000 government bonus). £16,000 into a Cash or Stocks & Shares ISA. Together, that’s the full £20,000 annual limit. Any interest, investment growth or government bonuses won’t be included in your annual ISA allowance.