UK Money Blog | Saving, ISAs, Apps, Calculators, Making Money
You may already have an ISA and are interested in opening another one, but you’re not clear about how many ISAs you can have. Read our quick guide to find out if you can have more than one ISA.
The short answer is you can have up to four different types of ISA in one tax year.
The four different kinds of adult ISAs are:
- Stocks and Shares ISAs (also called Investment ISAs)
- Cash ISAs
- Innovative Finance ISAs
- Lifetime ISAs
Not covered in this guide:
- Junior ISA
The full ISA allowance for tax year 2019/20 is £20,000.
You can split this any way you want between one to four ISAs, providing your Lifetime ISA premiums do not exceed £4,000 per year.
Can you have more than one ISA with different providers?
Yes, you can choose to have your ISAs with different providers for each account.
Types of ISA: Stocks and Shares ISA
With a Stocks and Shares ISA you invest your money as opposed to saving it. What you invest in will be dependent on the funds you select. As an investment, this type of account carries with it an element of risk which means you could lose some of your money.
On the flip side, a Stocks and Shares ISA has far better growth potential than a Cash ISA. It is also advisable that you leave your money in the account for the medium to long term, meaning at least five years. The longer you leave your money in a stock and shares ISA, the better your chances of riding out the ups and downs of the stock market and seeing your money grow. Try out this Stocks & Shares ISA Calculator to see how your ISA could grow.
Cash ISAs are effectively tax-free savings accounts. Unlike Stocks and Shares ISAs, there is no risk of losing any money. In recent years, though, with interest rates at historically low levels, returns for these plans have not been good. Cash ISAs are most suitable for short term savings goals or for customers who are averse to any risk. This Cash ISA calculator could give you an idea of how this product could grow your savings.
Innovative Finance ISA
This type of ISA allows you to use your ISA allowance to invest in peer to peer lending. Unlike other ISAs, they are not protected by the Financial Services Compensation Scheme. which means if a large number of your borrowers were to default, you could lose money.
Designed for first time home buyers, and saving for retirement, the Lifetime ISA is a dual purpose account and is available to savers between the ages of 18 and 39. The government also provides a 25% bonus on contributions made.
If the funds are not used to buy a first home, they can be kept for retirement. However, if the funds are not used to buy a first home and are withdrawn before the account holder turns 60, there will be a withdrawal penalty to pay.
This article is for information only and should not be taken as advice.