ISA Minus Cover

How Many ISAs Can I Have?

You can split your annual Individual Savings Account (ISA) allowance among several different types of ISA but not into more than one ISA of the same type in one tax year which starts on April 6th. The types of ISA are: cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs and Lifetime ISAs. The maximum you can save in ISAs in 2018/19 is £20,000 split any way you like between those types.

Example for 2017/18 Tax Year

  • Paid £10,000 into a Vanguard Stocks and Shares ISA
  • Paid £3,000 into a Cash ISA from Nationwide
  • Paid £7,000 into an Innovative Finance ISA with Ratesetter
  • Paid £4,260 into a Junior ISA for each of two children with Orbis
  • Cash ISA
  • Stocks & Shares ISa
  • Innovative FINANCE ISA
  • lifetime ISA

Innovative Finance ISAs are for higher risk investments that potentially offer higher returns, but also come with a greater risk of loss. These include peer-to-peer lending, where you lend money directly to other people or to companies using a website as an intermediary, and crowdfunding investments.

Large peer-to-peer lending companies include Ratesetter, Funding Circle and Zopa. Crowdfunding companies that offer an Innovative Finance ISA include Crowd2Fund and Crowdstacker.

Your Personal Savings Allowance also applies to interest earned in peer-to-peer lending, so it may be advantageous to hold such investments within an Innovative Finance ISA.

How Many ISAs Per Household?

The £20,000 limit applies to each adult, but if we think in terms of households the limit is higher. If you are married or have a civil partner you each have a £20,000 limit each year. If you are a parent or guardian of a child under 18 each child has their own Junior ISA limit of £4,260 per year.

Cash/Stocks & Shares/Innovative Finance/Lifetime ISA

Junior ISA

Limit 2018/19 Tax Year

£20,000

£4,260

The Junior ISA can be split between one Cash and one Stocks and Shares ISA. A parent or guardian of a child opens and manages the ISA but the money belongs to the child who can take control of the account when they are 16 but can't withdraw money from the ISA until they are 18. Once open, anyone can pay into the Junior ISA up to the annual limit, so grandparents, uncles, aunts or even friends can make a lasting, annually compounding, gifts for your children.

Unlike adult ISAs Junior ISAs are limited to one ISA provider for each type. You can't switch Junior ISA provider from year to year. If you do want to change provider you'll have to transfer the investment from previous years to your new Junior ISA account.

Age Limits

The minimum age limits vary by ISA type but to be eligible for an ISA you must be resident in the UK (or if not resident then a Crown servant, such as a member of the armed services living abroad, or their civil partner).

Cash ISA

Stocks & Shares ISA

Innovative Finance ISA

Lifetime ISA

Junior ISA

Age Limits

16 or over

18 or over

18 or over

18 or over and under 40

Under 18

How Many ISAs from Previous Years?

Notice that you can open an ISA with a different provider of the same type each tax year. That means that you could have up to twenty ISAs of the same type e.g. stocks and shares ISAs which have accumulated over the years. This can become unwieldy if you have to log in to several websites and use several passwords. Some people choose to transfer old ISAs into a single account for this reason. Just to illustrate how complicated this could get here's an extreme example.

Example Stocks & Shares ISA History

Provider A ISA

Provider B ISA

Provider C ISA

Provider D ISA

1999 £7000

2004 £7000

2009 £7200

2014 £15000

2000 £7000

2005 £7000

2010 £10200

2015 £15240

2001 £7000

2006 £7000

2011 £10680

2016 £15240

2002 £7000

2007 £7000

2012 £11280

2017 £20000

2003 £7000

2008 £7200

2013 £11520

2018 £20000

In the example above we've switched ISA provider every 5 years so that over the 20 year history of ISAs we have accumulated 5 different providers. But in theory you could have chosen a different provider each year and have 20 ISAs!

How Much Could You Have Saved?

If you had invested your full ISA limit the total you could have saved is £206,560. If you had received an average return of 6% per year on your investments that would now be worth £336,900. If both you and your partner had invested the full limit that would double the value.

Total ISA Saving 1999-2018

If you're annoyed that you missed out remember it's never too late to save, but the sooner you do it the better. And remember that fees compound as well as returns. Over the 20 year history of ISAs a 2% fee would have compounded to a total fee of £54,000 or 41% of your return. On the graph above see how the high-fee line (red) drops further and further below the low-fee line (orange) as 2% fees steadily eat away your returns. This is why you will receive a huge long-term payoff if you shop around for an ISA provider that has low fees.

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April 13, 2018
ramin

Investment coach, financial author and founder of PensionCraft. Ramin wants to share his knowledge of how to succeed in long-term investment by keeping fees low, understanding behavioural investment pitfalls, knowing how to read macroeconomic indicators and understanding and controlling risk.