Can I Have Two ISAs in the Same Tax Year?
Navigate the UK ISA rules to understand if you can hold multiple tax-free savings accounts and how to maximize your allowances.
Individual Savings Accounts (ISAs) in the UK offer a tax-efficient way to save and invest, sheltering your money from income tax and capital gains tax. While it is possible to hold multiple ISAs, specific regulations govern how many new accounts you can open and contribute to within a single tax year. Understanding these rules is important to maximize your tax-free savings potential and ensure compliance with HM Revenue & Customs (HMRC) guidelines.
Understanding ISA Types and Contribution Limits
The UK offers several types of ISAs, each designed to meet different savings and investment objectives. A Cash ISA is used for savings. A Stocks & Shares ISA allows investments in funds, shares, and other securities. An Innovative Finance ISA (IFISA) facilitates investments in peer-to-peer lending. The Lifetime ISA (LISA) supports saving for a first home or retirement, offering a government bonus on contributions.
For the 2025/2026 tax year, the overall annual ISA allowance is £20,000, which applies across all ISAs combined within the tax year (April 6 to April 5). The Lifetime ISA has a specific sub-limit of £4,000 per tax year, which counts towards the overall £20,000 allowance. For instance, if you contribute the full £4,000 to a LISA, you would have £16,000 remaining for other ISA types. Junior ISAs, designed for those under 18, have a separate annual allowance of £9,000. The annual allowance resets at the start of each new tax year, and any unused allowance from a previous year cannot be carried forward.
Rules for Opening New ISAs Each Tax Year
Recent changes to ISA regulations, effective from April 6, 2024, have introduced greater flexibility regarding the number of ISAs you can open. Previously, individuals were limited to opening and subscribing to only one of each ISA type in any given tax year. Under the updated rules, you can now open and contribute to multiple Cash ISAs, Stocks & Shares ISAs, and Innovative Finance ISAs within the same tax year. This allows you to spread your annual allowance across various providers or accounts of the same type, such as opening two Cash ISAs with different banks to potentially benefit from varying interest rates.
Despite this change, certain restrictions still apply. You are still limited to opening and contributing to only one Lifetime ISA in a single tax year. Similarly, for Junior ISAs, a child can only have one Junior Cash ISA and one Junior Stocks & Shares ISA at any one time. While you can now pay into multiple ISAs of the same type within a tax year, ensure your total contributions across all ISAs do not exceed the overall annual allowance of £20,000. You can also hold numerous ISAs from previous tax years with different providers, as the new account opening rules apply only to contributions made in the current tax year.
Managing Your ISA Investments and Transfers
Managing your ISA investments involves understanding how to allocate your annual allowance and how to transfer funds between accounts. The overall £20,000 annual ISA limit can be distributed across the various ISA types you subscribe to during a tax year. For example, you might choose to put £10,000 into a Cash ISA and the remaining £10,000 into a Stocks & Shares ISA, or any other combination that fits your financial goals, provided you stay within the total limit. This flexibility allows for diverse saving and investment strategies.
Transferring existing ISA funds is a common practice to consolidate accounts, seek better rates, or change investment strategies. To maintain the tax-free status of your funds, transfers must be initiated directly between ISA providers using an official ISA transfer form. Do not withdraw the money yourself and then re-deposit it into a new ISA, as this would be considered a new subscription and count against your current year’s allowance.
Funds transferred from an ISA held in a previous tax year do not count towards your current year’s subscription limit. Since April 6, 2024, you are permitted to make partial transfers of current year’s ISA contributions between providers. Transfer times vary depending on the ISA type, with Cash ISA transfers taking up to 15 working days and Stocks & Shares ISA transfers potentially taking up to three months.
Addressing Over-Subscriptions
HM Revenue & Customs (HMRC) actively monitors ISA subscriptions to ensure compliance with the annual contribution limits. If an individual inadvertently over-subscribes, meaning they contribute more than the annual allowance, or breach other rules like opening more than the permitted number of Lifetime or Junior ISAs, HMRC will identify the discrepancy. HMRC will contact the individual to rectify the situation.
The consequence of an over-subscription is that the excess amount, along with any gains or interest earned on that specific portion, will lose its tax-free status. HMRC will instruct the ISA provider to “repair” the ISA, which involves removing the invalid portion of the subscription. The individual may then be required to withdraw the excess funds and pay income tax or capital gains tax on any earnings generated from that non-compliant amount. Contact your ISA provider and, if necessary, HMRC directly if you realize an over-subscription has occurred, as being proactive can simplify the resolution process.