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how many isas ca i have
how many isas ca i have

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How Many ISAs Can I Have?

An ISA is aimed at helping you save more by not paying any taxes on the money you earn. This includes any interest earned on ISAs and money made from the sale of shares within an ISA. But how many ISAs can have exactly? Let's find out!
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An ISA is aimed at helping you save more by not paying any taxes on the money you earn. This includes any interest earned on ISAs and money made from the sale of shares within an ISA.

Every person is allowed to open one ISA of each type per tax year. You need to be at least 18 years old to open an ISA, with the exception of a Cash ISA where you need to be at least 16 years old. 

If you, for some reason, have opened more than one ISA of the same type in one tax year, it’s important to let your fund manager know as soon as possible. In some cases, an ISA may remain open if you have consulted with HM Revenue and Customs. 

Once an ISA is open you can leave it open for as long as you like. You can add to your ISAs every year or open a new one. Keep in mind that if you open new ISAs you should monitor them regularly to make sure they are giving you the best possible returns. 

Some people feel it’s difficult to track multiple ISAs while others like to have the diversity. You can also choose to transfer ISAs to different types of accounts.

How ISAs work

An Individual Savings Account (ISA) helps you to save tax-free and there are four different ISAs to choose from, which includes: 

  • Lifetime ISAs

  • Innovative finance ISAs

  • Stocks and shares ISAs

  • Cash ISAs

Note that there is also a Junior ISA available for individuals under 18 years old. 

You do not pay tax on the interest earned on cash in an ISA or the income or capital gains from investments in an ISA. If you complete your tax return every year, you don’t have to declare any capital gains, income, or interest on your ISAs. 

Note that you can only pay into one of each type of ISA every year. So you can still contribute to four different types of ISAs during every tax year, but not more than once to each. For example, you cannot pay into two Cash ISAs during the same tax year.

You can also inherit an ISA from a partner or spouse when they pass away. If these ISAs continue to grow after the person died, the growth will remain tax-free. 

For example, if a deceased person’s ISA is not transferred to their spouse in let’s say six months, and it earns interest of £500 in that time, it will make up part of the spouse’s additional subscription as opposed to the spouse losing out on the interest.

Adding money to an ISA

Every tax year you can add money to your ISAs and the year runs from 6 April to 5 April. 

The maximum combined total you can add across all your ISAs every tax year is currently £20,000 per individual for the 2021-22 tax year. For a Lifetime ISA, you can add up to £4,000 per tax year. 

This is also known as your ISA allowance; the current Junior ISA allowance per tax year is £9,000.

As an example: You can save £12,000 in a Cash ISA, £3,000 in an innovative finance ISA, and £5,000 in a stocks and shares ISA in one tax year (so a total of £20,000 for the year).

Keep in mind that your ISAs don’t close when the tax year finishes. You will keep the savings on a tax-free basis for as long as you want to keep the ISA open.

What is a Cash ISA?

A Cash ISA can include the following:

  • Some National Savings and Investments products

  • Savings in a bank or building society account

Cash ISAs are similar to a regular savings account but you don’t pay any tax on earned interest. A Cash ISA is ideal if you want to earn tax-free interest on cash savings.

Although you can only open one Cash ISA per year you can transfer to other Cash ISAs or stocks and shares ISAs with another provider during the same tax year. If you make a withdrawal from your Cash ISA your annual limit won’t reset for the current tax year, unless you have a flexible ISA.


What is a stocks and shares ISA?

Stocks and shares ISAs can include the following:

  • Corporate bonds

  • Government bonds

  • Unit trusts and investment funds

  • Shares in companies

Keep in mind that you can’t transfer non-ISA shares that you already own into a new ISA unless they come from an employee share scheme.

What is a Junior ISA?

A Junior Individual Savings Account (Junior ISA) is an ISA account specifically for individuals under the age of 18 and living in the U.K. There are two types: a cash Junior ISA and a stocks and shares Junior ISA. 

If you have a child living outside of the U.K. they can get a Junior ISA if:

  • You are a Crown servant (e.g. armed forces, civil service, or diplomatic service).

  • They depend on you for care.

Keep in mind that you can’t fund a Junior ISA and have a Child Trust Fund. You can ask the provider to transfer the trust to fund the Junior ISA.

Parents can open a Junior ISA and manage the account on the child’s behalf, but the money belongs to the child. The account can also be managed by guardians with parental responsibilities. 

The child can take over control of the account once they are 16 years old, however, they can’t make withdrawals until they are 18 years old. 

A cash Junior ISA means you won’t pay tax on the interests you earn for the cash you save. A stocks and shares Junior ISA means you won’t pay tax on the dividends or capital growth you receive.

What is a Lifetime ISA?

A Lifetime ISA can include cash, or stocks and shares. You can use it to buy your first house or to leave as savings for later on in life. You have to be over 18 but under 40 years old to open a Lifetime ISA.

You can add up to £4,000 per year in a Lifetime ISA until you reach the age of 50. You have to make your first payment into your ISA before you are 40 years old. 

Note: The Lifetime ISA limit of £4,000 counts toward your annual ISA limit.

When you turn 50 you won’t be able to pay into your Lifetime ISA anymore but it will stay open and still earn investment returns or interest. 

You can withdraw from your Lifetime ISA when you are:

  • 60 years or older

  • Buying your first house

  • Terminally ill with less than a year to live

You will pay a 25% withdrawal charge if you withdraw cash for any other reason. You may take out your savings from your Lifetime ISA when you are 60 years or older.

What is an innovative finance ISA?

  • An innovative finance ISA can include:

  • Crowdfunding debentures (investing in a business by purchasing its debt)

Note that you can’t transfer any crowdfunding ventures or peer-to-peer loans that you already have into an innovative ISA.

How to open an ISA

An individual savings account can be opened from:

  • Building societies

  • Credit unions

  • Banks

  • Stockbrokers

  • Crowdfunding companies

  • Peer-to-peer lending services

  • Other financial institutions

You can contact the provider directly for more information about opening an account with them. 

Keeping ISAs open

You can keep an ISA open as long as you want, and also open new ones every year. As mentioned above, you can also transfer an ISA to a different type of account. However, if you do choose to transfer, make sure you don’t simply withdraw funds to move them, or you’ll lose your tax advantages. 

Instead, initiate a transfer through the receiving manager or institution so that your transaction is not recorded as a withdrawal but rather as a transfer. 

If you understand the rules of ISAs you can make the most out of these accounts and gain the tax advantages they offer without penalties. 

Withdrawing your money

You can withdraw money from your ISA at any time without losing any tax benefits. 

Review the terms of the specific ISA you have to see if there are any charges for withdrawals. Also, keep in mind that there are different rules when withdrawing money from a Lifetime ISA.

In most cases, your ISA will be ‘flexible’ meaning you can make a withdrawal during the tax year and then deposit the same amount back without reducing your allowance.

Your provider can tell you if your ISA is flexible.


What happens if I exceed my ISA limit?

As it is possible to have multiple ISAs, you may risk paying too much during the same tax year. Records for individuals are checked at the end of each tax year, so HMRC will know if you’ve paid too much money during that year. If this is the first time it happens, you may receive a warning letter.

However, if HMRC takes action, they may instruct your ISA provider to remove the over-payments and tax any income you may have received from it. 

What happens to my ISA when I pass away?

If you are in a civil partnership or married, your ISA allowance can be inherited by your spouse, regardless of whether they inherit the actual money in the ISAs. They will receive an ISA allowance that is similar to your ISA at the time of your death and it is called an ‘additional permitted subscription’. The rules are quite complex on ISA inheritances so it’s important to familiarise yourself with it. 

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