I’ve paid into some Easy Access Cash Isa this year, but I also want to pay into another Cash Isa.
The second is a flexible Isa and I want a tax-free fund that I can take money in and out of, which is not possible with the first account.
Can I just pay money into two cash Isas, now that the Isa rules have changed so we can do so?
The app doesn’t seem to ask me if I’ve paid for another one this year.
The sky is the limit? The new Isa rules mean that, in theory, savers will be able to open as many cash Isas as they want.
Helen Kirrane from This is Money responds: In a major shake-up of tax-free accounts, savers and investors can now open and pay out as many Isas as they want, as long as they do not exceed the £20,000 limit for the 2024/25 financial year.
There is one exception to the rule which is the Lifetime Isa, of which you can still only have one.
Previously, savers could only open and pay for one cash Isa and one stocks and shares Isa per year.
This has now changed under rules announced by the Chancellor last November.
Not all Isa providers allow savers to open more than one account with them, although some have given savers the ability to open multiple types of Cash Isa, for example Hargreaves Lansdown and Charter Savings Bank.
It will also be up to savers to keep track of how many Isas they have opened and whether they are within their £20,000 Isa limit.
We asked two savings experts to clarify the rules.
James Blower, founder of the Savings Guru website, responds: You’re right, the rules have changed and savers can now open as many Isas as they want, as long as they stay within the limits.
The app won’t ask you if you’ve paid into another Isa this year, because the onus is on the individual to keep track and stay within the limits.
In theory, savers could open an Isa every day with a new provider, but the reality is that the more they open, the more they have to keep track of and the harder it is to ensure they stay within allowances.
Banks have no way of knowing if you have opened Isas with other providers and how much of your allowance you have used with them. Therefore, they cannot alert you that you have defaulted on your allocations due to balances held elsewhere.
While HMRC has historically been sympathetic to people who accidentally opened a second Isa in the same tax year, it remains to be seen how relaxed they are about people over-allowing, whether by mistake or deliberately, this year.
My recommendation to savers is that it is definitely worth using different providers to maximize allocation and rates, but there comes a point where it is not worth it.
For example, a 0.25 per cent increase in the rate on the total allowance of £20,000 equates to an extra £50 in interest, but, if the balance is split between four Isas, then a 0.25 per cent increase over £5,000 is only worth £12.50. then the effort may not justify the reward.
Anna Bowes, co-founder of Savings Champion responds: What many people may not realize is that Isa providers do not have to adopt the new changes to the Isa rules. So, if anything, savers are more confused than ever about what they can and can’t do.
People should now be allowed to open and pay for multiple Isas of the same type in a single tax year. Previously, people could only pay into one of each type of Isa each tax year – for example, one cash Isa and one stocks and shares Isa.
The bottom line is that you should check with the Isa provider you are considering to make sure they don’t give you your funds back.
This was the case unless your Isa provider had previously adopted the ‘portfolio Isa’ rule, which has been around for some years, allowing savers to open more than one cash Isa with the same provider in the same tax year. .
This goes by a number of names (we call it the ‘Portfolio Isa’ rule), but only a small number of providers have adopted it, including Paragon, Aldermore, Charter Savings Bank, Nationwide and Ford Money, to name a few.
The new rule is therefore in addition to the ‘portfolio Isa’ rule and should not be confused with it.
Under the new rules, savers assume they can open more than one Isa, either with more than one provider or with the same provider.
But our research has shown that while many providers, although not all, will allow you to open another cash Isa with them if you have already opened and funded an Isa with someone else in the current tax year, this does not mean they have adopted the Isa rule of portfolio, so you may not be able to open two Isas with them.
This new rule is beneficial as it means that if you don’t deposit your entire Isa allowance initially, you can open another Isa with the best available rates at a later date if you wish. It is not necessary to simply add something to the one you already opened.
Or, if you opened a fixed rate Isa with less than the full allowance but had more funds later that tax year, it is unlikely that you will be able to add more to the Isa you have as it will have been closed to new subscriptions.
So being able to open another Isa with someone else is great news. However, you may not be able to do this depending on the provider’s rules.
The bottom line is that you should check with the Isa provider you are considering to make sure they don’t give you your funds back.
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