When Can I Open a New ISA? Key Rules and Allowances

Individual Savings Accounts (ISAs) in the UK offer a tax-efficient way to save and invest. These accounts allow individuals to shield their earnings from income tax, capital gains tax, and tax on dividends. Understanding the rules for opening new ISAs is important for maximizing their benefits and making informed savings decisions.

Annual Allowance and New ISA Rules

The ability to open a new ISA is closely tied to the UK tax year, which begins on April 6th and concludes on April 5th of the following year. At the start of each new tax year, a fresh ISA allowance becomes available, enabling individuals to contribute new funds or open new accounts. This annual allowance represents the maximum total amount that can be saved across all ISA types within that specific tax year. For the 2025/2026 tax year, this limit is £20,000.

Eligibility to open an ISA generally requires an individual to be 18 years of age or older and a resident in the UK for tax purposes. Previously, 16 and 17-year-olds could open Cash ISAs, but this minimum age was raised to 18 from April 6, 2024, with transitional arrangements in place until April 5, 2026. Should any part of the annual allowance remain unused by the end of the tax year on April 5th, it cannot be carried forward.

A notable change from April 6, 2024, allows individuals to open and contribute to more than one Cash ISA, Stocks & Shares ISA, or Innovative Finance ISA of the same type within a single tax year, provided that the total contributions across all ISAs do not exceed the overall annual allowance. However, strict rules still apply to certain specialized ISA types, limiting contributions to a single account of that specific type in a tax year.

Opening Specific ISA Types

While general rules apply to most ISA types, some have unique conditions that affect when they can be opened or how their contributions interact with the overall allowance. Cash ISAs and Stocks & Shares ISAs typically adhere to the standard annual allowance and eligibility criteria. Innovative Finance ISAs, which involve peer-to-peer lending, also follow these general rules.

Lifetime ISA (LISA)

The Lifetime ISA (LISA) is designed to help individuals save for a first home or retirement. To open a LISA, an individual must be aged between 18 and 39. Contributions can continue until age 50, with a maximum annual contribution of £4,000. This £4,000 limit is part of the overall £20,000 annual ISA allowance. Funds can be accessed without penalty for a first home purchase, provided the property costs £450,000 or less, or from age 60, or if the individual is terminally ill.

Junior ISA (JISA)

The Junior ISA (JISA) is specifically for children under 18. A parent or legal guardian can open a JISA for a child, and the funds belong to the child, becoming accessible when they turn 18. The JISA has its own separate annual allowance, which is £9,000 for the 2025/2026 tax year, and this does not count towards the adult’s personal ISA allowance. A child can hold one Junior Cash ISA and one Junior Stocks & Shares ISA at any given time, with the combined contributions not exceeding the £9,000 limit.

Transferring and Consolidating ISAs

Transferring existing ISA funds between providers or different ISA types does not count as opening a “new” ISA for the purpose of the annual allowance. The transfer must be carried out directly between ISA providers to ensure the tax-free status of the funds is maintained.

When transferring funds contributed in the current tax year, the entire amount must be moved. Conversely, funds from previous tax years can be transferred either fully or partially, offering greater flexibility. Transferring an ISA can be a way to move funds to a provider offering better rates or different investment options without affecting the current year’s contribution limit.

If an ISA has not received contributions for a full tax year, it may become “non-continuous” or dormant. Re-activating such an account by making a new subscription does not constitute opening a new ISA in the context of the annual allowance rules. The process to re-activate a dormant account typically involves contacting the provider to update details and confirm identity. This allows the individual to resume contributions to an existing tax-wrapped account.