Individual Savings Accounts (ISAs) (2024)

FAQs

What happens if you open too many ISAs? ›

In situations where you have saved in excess of this sum in your ISAs in the tax year, you will need to discuss with your ISA providers, the removal of the excess from your ISA, incuding any interest the excess generated, and return it to you. The excess interest is taxable and should be declared.

Even with PSAs, ISAs are still a good option for many people. There are several benefits to ISAs, including for long-term savings, inheritance, and reducing risk. We outline the personal savings allowance and why ISAs are still an attractive option below.

The Individual Savings Account (ISA) was introduced in 1999 as an encouragement to save for the long term. It provides you with a personal ISA allowance, which offers tax-free returns on savings or investments up to a certain amount. There's no limit to how many ISAs you can have at any one time.

cash ISAs – these are like ordinary savings accounts, except interest on your savings is protected from tax. stocks and shares ISAs – these protect various types of investment income from tax.

Over time, you could easily end up with many different ISAs with different providers, even if you stick to the same type of ISA. There's no limit on the number of accounts you can open in your lifetime, but obviously the more accounts you open, the harder it will be to manage them.

Although you can have lots of different ISAs, you can currently only open and contribute to one of each type in a tax year – within your annual allowance. This rule will change from April 2024, so you can open multiple ISAs of the same type without losing your ISA allowance.

The cons of ISAs

Contribution limits: The government sets annual contribution limits for ISAs, so individuals with larger sums cannot fully utilise its tax advantages. People who exceed the annual contribution limit may have to find alternative savings or investment vehicles, thereby missing out on ISA tax benefits.

Whether a Cash ISA or a standard savings account is best for you will depend on your circ*mstances. People often choose to invest in ISAs for long-term larger investments and use other savings accounts for smaller short-term savings. However, you should make the decision based on your unique needs and budget.

If you are saving small amounts for a short-term goal, then a savings account will likely be the better option as it's unlikely that you will exceed the personal savings allowance. Anyone who is looking for a home for a large amount of money, though, should consider an ISA.

Contact HMRC's ISA helpline to explain what's happened – 0300 200 3300. HMRC will work out which ISA needs to be void and tell you what to do next. This will likely involve contacting the provider of the void ISA with instructions to fix it.

Can I have two ISA accounts with different banks? ›

How many ISAs can I have? You can have as many ISAs as you like, as long as you meet the eligibility criteria for each type. However you can only pay into one Lifetime ISA in a single tax year (up to £4,000) and you can't pay more than your annual £20,000 ISA allowance overall.

How much money can I put into ISAs? You can put up to £20,000 in ISAs in your name each tax year, which is a limit set by HMRC. The allowance limit resets when the new tax year starts and could change each year. There are currently four types of adult ISA – cash, stocks and shares, innovative finance and lifetime ISAs.

You could pass on your ISA balance to your spouse or civil partner as a tax-free allowance in the event of your death. This isn't something that traditional savings accounts provide. An ISA is a safe place to save your money without any investment risk.

You do not pay tax on: interest on cash in an ISA. income or capital gains from investments in an ISA.

An ISA (individual savings account) is a tax-free savings or investment account that allows you to put your ISA allowance to work and maximize the potential returns you make on your money, by shielding it from income tax, tax on dividends and capital gains tax.

As of 6 April 2024, the new ISA Regulations allow you to put money into more than one ISA of the same type, such as a Stocks & Shares ISA. However, if you find yourself to have deposited more than the annual subscription limit, we recommend contacting HMRC for further details.

Since the start of the 2024/25 tax year, there is no limit on the number of ISAs that you can open with different providers (apart from lifetime ISAs). This means you could have a Cash ISA with us, and another with a different bank or building society.

An ISA is a tax-efficient wrapper. You can use this each year to shelter a certain amount of money – your annual ISA allowance, as set by the government – from income tax, tax on dividends, and capital gains tax. You can open an ISA or ISAs each tax year, so you can have multiple accounts with different providers.

Rules on multiple cash ISAs

You're allowed to open one new cash ISA each tax year. Transferring funds from previous years' ISAs is possible and won't affect your current year's allowance.