The individual savings account (Isa) is the core of any saver’s portfolio, offering a tax-free way to build your money and a range of options for doing so. While there are limits on how much you can pay into your Isa each year and still receive the tax benefits, there are no limits on how many different ISAs you can have. You could focus on just one or two, or spread your money around several different products.
Here we dive into the question of holding multiple Isas and what you need to remember if you choose to do it.
Can I have more than one Isa?
In short, you can have as many Isas as you like. These could be with several different firms, or you might be able to have multiple accounts at the same bank or investment provider. One reason many people have more than one Isa is because there are a few different types. Cash Isas, for example, are classic savings accounts. Your money goes into the account and stays there, accruing interest. A stocks & shares Isa, on the other hand, is for investing in assets such as company shares and bonds. Its value can go up or down, with investors generally holding their investments for the long term in order to generate a return.
There is also the government-backed Lifetime Isa (Lisa), which is designed to help savers either buy their first home or fund retirement, and receives bonus top-ups from the Government. You can even have more than one Isa of the same type, but you can only pay into one of each type in a tax year. So, if you had two cash Isas and one stocks and shares Isa, you could contribute to one of your cash Isas and the stocks and shares Isa on a given year, but could not pay into both cash Isas.
Another limitation to be aware of is that on junior Isas. These are savings accounts you can open for a child under 18, and like adult ones they can be either cash or stocks and shares. But children can only have one of each of these types of ISA until they are 16, when they can open an adult cash ISA.
How much can I pay into my Isas?
Everyone can save up to £20,000 into Isas per tax year. This does not have to all go into the same account, so you can top up lots of different Isas with smaller amounts if you prefer. There are tighter restrictions on certain ISAs. For the current tax year, you can only pay £9,000 into a junior Isa. Meanwhile Lisa contributions are capped at £4,000 per year.
Don’t forget that your savings are only protected up to £85,000 per institution by the Financial Services Compensation Scheme (FSCS), which backs up your money in the event that a bank or other financial firm goes bust.
This amount covers all your accounts with one provider, so if you want to save more than this amount, make sure you have it spread around across different institutions.