How Many Stocks and Shares ISAs Can I Have?
Navigate the rules for Stocks and Shares ISAs. Understand how many you can open and manage for optimal tax-free investment growth.
An Individual Savings Account, commonly known as an ISA, offers a tax-efficient way for individuals to save and invest. Specifically, a Stocks and Shares ISA allows investments to grow free from UK income tax and capital gains tax. This investment vehicle is available to UK residents.
Annual ISA Subscription Limits
The annual ISA allowance provides a set limit on the total amount an individual can contribute across all their ISA accounts within a single tax year. For the 2024-2025 and 2025-2026 tax years, this overall allowance is £20,000. This limit applies to all types of ISAs combined, including Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs.
A significant change introduced from April 6, 2024, allows individuals to open and contribute to multiple Stocks and Shares ISAs within the same tax year. This also applies to Cash ISAs, providing more flexibility than in previous tax years. Despite this change, investors must monitor their total contributions to ensure they do not exceed the £20,000 annual allowance across all their ISA providers.
While new contributions must adhere to the annual allowance, individuals can hold multiple Stocks and Shares ISAs that were opened in previous tax years. These older ISAs do not count towards the current year’s contribution limit. The allowance resets each tax year, meaning any unused portion cannot be carried forward.
Managing Existing ISA Funds
Individuals often accumulate multiple Stocks and Shares ISAs over several tax years, each containing funds from different contribution periods. These older ISAs can be held indefinitely, continuing to benefit from their tax-efficient status. This allows for diversified investment strategies across various providers or asset classes.
Transferring funds between ISA providers helps consolidate accounts or move investments to a provider offering better terms or a wider range of investment options. To maintain the tax-free status of the funds, transfers must be conducted directly between ISA providers. Do not withdraw the funds yourself and then re-deposit them, as this would cause them to lose their ISA wrapper and tax benefits.
Rules regarding transfers differ based on when the funds were originally contributed. For money contributed in the current tax year, partial transfers are now permitted as of April 2024. For funds accumulated in previous tax years, investors have the flexibility to transfer all or just a portion of their holdings.
Actions for Over-Subscription
An over-subscription occurs when an individual contributes more than the annual overall ISA allowance, which is £20,000 for the 2024-2025 and 2025-2026 tax years. Even with the new flexibility to open multiple Stocks and Shares ISAs in a single tax year, exceeding the total annual allowance across all accounts is a breach of the rules. Her Majesty’s Revenue and Customs (HMRC) identifies such instances through annual reports from ISA providers.
Upon identifying an over-subscription, HMRC typically contacts the ISA provider or the individual to rectify the error. The excess subscription, along with any income or gains generated from that invalid portion, will lose its tax-free status. The individual becomes liable for any income tax or capital gains tax due on these amounts. For instance, if an individual invested £25,000 instead of £20,000, the £5,000 excess and its returns would become taxable.
If an individual realizes they have inadvertently over-subscribed, they should contact their ISA provider immediately. Some providers may void the excess transaction if notified within a specific timeframe, such as 30 days. Addressing the issue promptly minimizes tax liabilities and ensures compliance.