Can you have more than one cash ISA? At a glance
- What do I need to know? You can have more than one cash ISA, but your annual £20,000 contribution limit is split between your accounts.
- What does it mean for me? You can hold cash you’ve deposited in old ISAs, even if you don’t contribute to them every year.
- Why does it matter? Opening multiple cash ISAs can enhance your FSCS protection, expand your earning potential with competitive rates, and provide flexible accessibility to your funds.
Cash ISAs (Individual Savings Accounts) let you earn tax-free interest on your savings. But there are rules that limit your annual contributions, whether you have one account or multiple cash ISAs.
In this guide, you’ll learn how many cash ISAs you can open, and how to stay within the rules around holding money and contributing to each of your accounts.
Can you have more than one cash ISA?
There are no limits on the number of cash ISAs you can open and hold at any time. But there is an annual £20,000 contribution limit.
And there is currently speculation that the Chancellor is set to reduce this annual ISA contribution limit to £10,000 in the upcoming November budget. This would constitute a ‘blow to savers’ according to Flagstone CEO, Simon Merchant:
‘Savers deserve protection from their government,’ Merchant said, addressing fears savers will be pressured to take more risks with their money. ‘In any other situation, wouldn't this be called holding savers to ransom?’
Savers deserve protection from their government. In any other situation, wouldn't this be called: "holding savers to ransom?"
How can you use your annual ISA limit?
You can deposit your full allowance into a single cash ISA, or split it across multiple accounts.
This can help you balance accessibility and returns, while providing Financial Services Compensation Scheme (FSCS) protection up to £85,000 if the financial institution holding your money goes out of business. By spreading your sum across authorised accounts, you can protect your full deposit.
Can you have cash ISAs from different tax years?
You can keep ISAs open that you deposited into during previous tax years. Limits only apply to the contributions you make within each tax year.
Once you’ve hit your annual contribution limit, you can’t make further deposits. But when the next tax year begins, your allowance resets, so you can build up tax-free interest earnings over a handful of years.
Even if you don’t top up every account you have, holding cash ISAs from previous tax years could mean you grow your savings through compound interest.
If you want to transfer the balance in ISAs from previous years to a new account, you need to be aware of the rules. For example, if you withdraw and reinvest your money yourself, HMRC may treat this as a second contribution, rather than a transfer.
This can use up your allowance without letting you increase the size of your savings.
The benefits of owning multiple cash ISAs
Holding multiple cash ISAs - and even splitting your annual contributions - can allow you to:
- maximise tax-free returns
- balance flexibility with protection
- stay within FSCS limits
The rules around owning multiple cash ISAs
While you can open more than one cash ISA, there are rules around how you can contribute to them. It’s important to follow these rules, or you risk losing your tax-free allowance.
You’ll need to deposit into compliant ISAs and only contribute up to your annual allowance limit. There is an official list of ISA managers approved by HMRC, who are authorised to manage these accounts.
Are there penalties for paying into more than one cash ISA in a tax year?
No. You can contribute to multiple cash ISAs each year, provided your total deposits don’t exceed your annual £20,000 limit.
There are no official penalties for exceeding your limit. But if you do, additional funds won’t be eligible for tax-free interest and your ISA manager will likely remove the excess from the account, returning your funds to you.
This means you could miss out on interest earnings in the intervening time between depositing your money and getting your refund.
Frequently asked questions about owning multiple cash ISAs
How many cash ISAs can I have?
There’s no limit to the number of cash ISAs you can hold.
If you have multiple savings accounts, it can be simpler to manage your money through a savings platform like Flagstone. This gives you greater visibility and control over your accounts.
Can I have a cash ISA and a LISA in the same year?
Yes. There are different types of ISAs and you can hold a range of accounts within the same year. You can also split your contributions between them as you wish.
All ISAs earn tax-free interest on your cash, but LISAs (Lifetime ISAs) have unique rules that affect withdrawals. So, if you’re saving for something specific like retirement, it could be worth maximising your contributions to your LISA. But it’s important to check the details before you deposit your money.
For support in understanding the benefits of different ISA types and how they might align with your goals, consider speaking to a Financial Adviser.
Do old cash ISAs from previous years use up my annual limit?
No. You can continue to hold ISAs from previous tax years to diversify your portfolio and balance risk, access, and FSCS protection.
The only time your money from an old ISA will use up your current allowance is if you attempt to transfer the balance to a new account yourself, rather than requesting an approved ISA manager to do so on your behalf.
Protect and grow your money with multiple cash ISAs
You can open and hold multiple cash ISAs legally. And owning multiple accounts can help build your wealth over time by protecting it against risk and growing it with high interest rates.
Splitting your annual ISA contribution allowance between different accounts can help you achieve a profitable balance of access, control, and tax-free compound interest.
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