Your questions answered: how many ISAs can I have at one time? 

Your Questions Answered panellist Laura Suter explains the rules surrounding tax-free savings accounts, or ISAs.  

Question: I have an investment ISA but cash ISA rates are looking better now. Can I have both? How does the annual allowance work between each? 

Answer: There are some strict rules about ISAs that can get pretty complicated, so make sure you don’t fall foul of them or risk an unwanted letter from HMRC.  

The good news is that you can have more than one ISA open at a time. That can be two or more of the same type, such as two cash ISAs, or different types, such as a cash and Investment ISA.

However, the golden rule is that you can only pay into one of each type in any tax year, which runs 6th April to 5th April). This means you can pay into both a cash ISA and a stocks and shares ISA in one year, or a cash ISA, a Lifetime ISA and a stocks and shares ISA. However, you cannot pay into two different cash ISAs, for example, in one tax year.

In your example, if you have already got and paid into an investment ISA in the current tax year, you can still open a cash ISA and pay into it without breaking the rules. 

If you accidentally pay into more than one cash or investment ISA in a year, don’t attempt to fix it yourself. Instead, call HMRC’s ISA helpline on 0300 200 3300 to get advice on what to do. 

The other thing you need to check is how much you’re paying into the accounts each year. You can pay in up to £20,000 into your ISA accounts each year, but that’s the total for all of them, not per account.

If you’d already paid £20,000 into your investment ISA this tax year, you wouldn’t be able to put anything in your cash ISA. But, if you’d only paid £10,000 into your investment ISA, for example, you’d be able to put £10,000 into your cash ISA.  

There is a specific annual limit of £4,000 for a Lifetime ISA, but this also counts as part of your overall £20,000 limit – it’s not separate. 

Something to look at when working out if you’ve hit this annual limit is whether your ISA account is flexible or not. If it’s flexible it means that if you deposit money and then withdraw it in a tax year, you can pay that money back in without it counting towards your ISA limit.

For example, if you pay £20,000 into an ISA, then withdraw £10,000 of it and then decide you want to pay in £5,000, you wouldn’t be able to if you didn’t have a flexible ISA (as you’d already have hit your £20,000 limit). But you would be able to with a flexible ISA, as you’re just replacing money you’d already paid in. 

On the investment vs cash decision, having cash savings is a good plan if you know that you’ll need the money in the next few years or if you want a readily-accessible emergency pot to dip into. But otherwise you should think about investing. That’s because investing is likely to be you best option for generating a higher return for your long-term savings.   

Laura Suter is head of personal finance at AJ Bell. She is a multi-award winning former financial journalist, having specialised in investments. 

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