Can You Have Two Stocks and Shares ISAs?

An Individual Savings Account (ISA) is a financial tool for personal savings and investments in the United Kingdom. It functions as a tax-efficient wrapper, shielding money held within it from income tax, capital gains tax, and tax on dividends. They are a fundamental aspect of personal financial planning in the UK, offering a structured way to grow wealth without incurring tax liabilities.

Understanding the Annual ISA Allowance

Each tax year, the UK government sets the annual ISA allowance, a maximum amount an individual can save across all their ISA accounts. For the 2025/2026 tax year, this allowance is set at £20,000. This is the total sum that can be deposited into any combination of ISA types within that tax year. The tax year runs from April 6th to April 5th. Any unused allowance cannot be carried over, meaning it resets at the start of each new tax year.

Rules for Stocks and Shares ISAs

A specific rule applies to new contributions to Stocks and Shares ISAs within a single tax year. An individual can subscribe new money into only one Stocks and Shares ISA per tax year. This applies regardless of the financial provider. Subscribing means placing fresh funds into the ISA for the first time in that tax year.

While new subscriptions are limited to one Stocks and Shares ISA per tax year, it is permissible to hold multiple Stocks and Shares ISAs from previous tax years. These accounts, established in earlier tax periods, continue to benefit from their tax-efficient status. They remain active and can grow, allowing individuals to maintain a diverse portfolio. If an individual inadvertently contributes to more than one Stocks and Shares ISA in a single tax year, HM Revenue & Customs (HMRC) typically contacts them to resolve the situation.

Managing Multiple ISA Types

Individuals can diversify their savings by subscribing to different types of ISAs within the same tax year. While the rule for Stocks and Shares ISAs applies, individuals can contribute to a Stocks and Shares ISA, a Cash ISA, and potentially a Lifetime ISA (if eligible) concurrently. Each of these ISA types serves a distinct purpose, from accessible savings in a Cash ISA to long-term investment growth in a Stocks and Shares ISA. However, the total amount contributed across all ISA types must not exceed the annual allowance.

For example, an individual utilizing the £20,000 allowance could allocate £10,000 to a Cash ISA and the remaining £10,000 to a Stocks and Shares ISA. Alternatively, they might choose to put £4,000 into a Lifetime ISA, which has its own contribution limit, and then distribute the remaining £16,000 across a Cash ISA and a Stocks and Shares ISA. This flexibility allows savers to tailor their strategy to their financial goals and risk appetite.

Transferring ISAs

Transferring an ISA differs from a new subscription and does not count towards the current year’s annual ISA allowance. This process allows individuals to move existing ISA funds, from current or previous tax years’ contributions, between different providers or even into a different type of ISA. When initiating a transfer, the new ISA provider typically manages the process directly with the old provider, ensuring the tax-free wrapper remains intact. Individuals should not withdraw funds themselves, as this could lead to the loss of tax-free status.

For funds contributed in the current tax year, the entire amount must generally be transferred. Conversely, when transferring funds from previous tax years, partial transfers are often permitted, providing greater flexibility. This distinction is important for individuals wishing to consolidate their ISA holdings or seek better interest rates or investment opportunities with a new provider. The transfer mechanism supports continuous tax-efficient growth of savings.