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Here we address some of the most common questions about Individual Savings Accounts (ISAs): how many can you have? How much can you invest? And how can you transfer between them?

Can you have more than one ISA?

For the current tax year (2023/24), which ends on Friday 5th April, you can open and contribute to one of each type of ISA (outlined below) in any single tax year. You can also still have ISAs from previous years. 

As announced in the 2023 Autumn Statement, from the 2024/25 tax year, which starts on 6th April, rules will be relaxed meaning investors and savers will be able to open more than one of each type of ISA in any tax year (excluding Lifetime ISAs). 

In practice this could mean savers, for example, would be able to contribute to both an instant access and fixed-term cash ISA in the same tax year. Note, tax treatment depends on your individual circumstances and may change.

A cash ISA, as offered by banks and building societies, may be suitable for those who want certainty of return through a stated interest rate, often with the possibility of instant access to their cash. 

Note however, that while a cash ISA is very unlikely to lose you any money, there is a small possibility of a bank becoming insolvent. The Financial Services Compensation Scheme provides some protection for deposits in the unlikely event of this happening.

For investors, the new rules could mean contributing to different stocks and shares ISAs, perhaps investing across different types of strategies.

A stocks and shares ISA may be ideal for those who want to put money away for the longer term - at least three years - by investing in equities and bonds. However, as with all investing, there is a risk of capital loss, which you wouldn't have with a cash ISA. 

You can invest in individual stocks, or through funds or portfolios that invest across different stocks and shares. At Nutmeg you can invest via risk-managed portfolios that hold a variety of exchange-traded funds (ETFs). Note that returns aren't guaranteed, and you may get back less than you invest.

For investors the new rules could, for example, mean a Nutmeg managed portfolio as a core holding, with a separate selection of individual stocks and shares held in a self-directed ISA held with a brokerage provider. 

While the new rules aim to offer people more flexibility when it comes to their ISA strategy, they also mean people will need to keep track of how much they're contributing to different ISAs. If you choose to contribute to multiple ISAs in a tax year, make sure you don't exceed your £20,000 annual allowance. 

It's also important to check with your ISA provider, as some providers may be taking a different approach to the new rules regarding holding multiple ISAs. 

What are the different types of ISA?

As well as cash and stocks and shares ISAs, there are also Lifetime ISAs (both cash or stocks and shares types), and innovative finance ISAs. For saving or investing for children, there's also the Junior ISA (JISA), which we'll discuss shortly. 

The Lifetime ISA (LISA) could be a good way to save or invest for either your first home or towards retirement. Those eligible (the first contribution must be made between the ages of 18 and 39) can contribute up to £4,000 per tax year and the government will give you a 25% bonus – that's up to £1,000 every year. However, conditions and exclusions apply, which we outline here.

Innovative finance ISAs (which are not offered by Nutmeg) may be suitable for more experienced investors as they invest in peer-to-peer loans and are considered higher risk.

Junior ISAs (JISA) can be set up by a parent or guardian for children under the age of 18. They, or friends and family, can contribute to the account but only the child can access the money – and only after they turn 18. Find out more around the JISA rules here

Read more: Which ISA is right for me?

How much can you invest in an ISA each year?

You are allowed to put £20,000 per tax year into ISAs under current rules. This allowance may change in the future.

As a new tax year starts on 6 April, you will have a fresh £20,000 allocation and you may then open a new ISA of each type if you want to, perhaps with a provider that offers different benefits. For example, they may offer a higher interest rate for cash ISAs, or a wider selection of investments for stocks and shares ISAs.

Note that JISAs have a separate allowance of £9,000 per tax year. These are different to other types of ISA as you can only open one cash JISA, and one stocks and shares JISA, throughout childhood.

What happens if I pay into more than one of the same type of ISA in the 2023/24 tax year? 

Accidents can happen, and it’s best to deal with this head on. If you think you have paid into more than one of the same type of ISA in a single tax year, you should contact your ISA providers straight away. You should also get in contact with HMRC to minimise any tax complications down the line. The HMRC ISA helpline is 0300 200 3300, open from 9am to 6pm Monday to Friday.

It’s likely that the provider(s) of any subsequent ISAs that you opened after the original one in any tax year would refund any payments and close or void the ISA.

As previously mentioned, the rules will relax in the 2024/25 tax year, allowing you to invest in more than one of the same type of ISA, though the annual allowance is sticking at £20,000. 

Can I transfer one ISA into another?  

In the current (2023/24) tax year, you can transfer between ISAs opened in this tax year without impacting your annual allowance, but it has to be the entire amount. It is also dependent upon your provider accepting transfers and you taking the correct steps.

However, from 6th April, the rules are set to change to allow partial transfers in-year between providers. So, rather than being limited to transferring a whole ISA, you will instead be able to move a portion of that ISA and so keep some money with your existing provider and retain that account.

For money you contributed to an ISA in previous years, there has always been the flexibility to transfer all or part of your pot.

Transferring your ISA does not count as opening a new one. Before you start any transfer, you should check whether your current or new providers will charge a fee for transferring or whether you may lose any benefits.

The transfer itself is usually handled by the provider of the ISA that you are transferring into, and can take several weeks to complete. They should outline the steps for you, starting by providing you with an ISA transfer form. It’s important not to withdraw and transfer your money yourself as you will lose the tax advantages of the ISA.

Transferring ISAs is common and can be a good practice to make the most of your money. This is especially so for cash ISAs, where the initial headline interest rate that you opened an ISA with may change in subsequent tax years. 

If another provider offers a better savings rate, it may make sense to transfer your ISA opened in a previous tax year. However, do first check the small print and make sure that you are comfortable with any lock-in periods or terms and conditions.

Transfers may also be possible for stocks and shares ISAs and LISAs, though first consider the long-term nature of investing. Leaving your pot to hopefully grow over a number of years, with the added benefit of compound returns on ongoing contributions, may be a better strategy than to transfer. Also, note that during any transfer, your investments will be out of the market.

We offer the ability to transfer your ISA to Nutmeg, with contributions going into our risk-rated managed global investment portfolios. Discover how to transfer your ISA to Nutmeg.

We have outlined the benefits of ISA transfers in our blog, Five reasons to transfer your ISA.

Can I transfer from a cash ISA into a stocks and shares ISA?

Yes, you can transfer from a cash ISA into a stocks and shares ISA, and vice versa. You may decide that you have the budget to transfer money from a low paying interest rate cash ISA into a stocks and shares ISA, which could potentially, over the course of several years, outpace inflation.

However please remember that investing can be volatile, and you may lose your money or get back less than you invest. You should always have easily accessible emergency savings in place alongside your investments.

Alternatively, your stocks and shares ISA may have grown and you now wish to reduce the risk and move it into a cash ISA. Perhaps you are now close to retirement, and wish to use this money alongside your pension, without the risk of potential future investment losses. 

Nutmeg's experts are on hand with free financial guidance should you need to speak to someone about your options, including ISA transfers. Book a free call today

Risk warning

As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. Tax treatment depends on your individual circumstances and may change. 

With Lifetime ISAs, if you need to withdraw the money before you’re 60, and it’s not for the purchase of a first home, you’ll pay a 25% government withdrawal charge. If you choose to opt out of your workplace pension to pay into a Lifetime ISA, you may lose the benefits of the employer-matched contributions. Your current and future entitlement to means-tested benefits may also be affected. If you are unsure if a Lifetime ISA is right for you, please seek financial advice.

To open a Nutmeg JISA, your child must be under the age of 16 and funds cannot be withdrawn until your child turns 18. If you are unsure if a Junior ISA is the right choice for you and your child, please seek financial advice. 

Before you transfer any ISA, LISA or JISA check you won’t lose any benefits and that you know what charges you may incur.