Saving or investing through an Individual Savings Account (ISA) can be a tax-free way to put money aside, with savings and investments free from UK income and capital gains tax (subject to current rules). If your circumstances change and your financial goals evolve, you might wonder whether you can open multiple ISAs or if you’re limited to just one account.
In this guide, we'll explain how many ISAs you can have at one time, the rules around holding different types of ISAs, and how this works alongside the annual ISA allowance. We’ll also explain what happens if you open multiple ISAs, helping you understand how to stay within the current rules.
This information is for general guidance only and does not constitute personal financial advice. Whether an ISA is suitable depends on your individual circumstances. Tax treatment depends on individual circumstances and tax rules may be subject to change in the future.
What are ISAs (Individual Savings Accounts)?
An ISA is a savings account designed to help people in the UK save or invest in a tax efficient way. There are several types of ISAs available, but they all share a similar basic structure: money held within an ISA can grow free from UK income and capital gains tax (subject to current rules).
ISAs can be an option for people who might otherwise exceed their Personal Savings Allowance - the amount UK taxpayers can earn on savings interest without paying tax, depending on their tax position and circumstances.
It’s important to remember that tax rules can change in the future, and the way tax applies will always depend on your personal circumstance.
ISAs are typically provided by regulated banks and financial services firms, and some are covered by the Financial Services Compensation Scheme (FSCS). FSCS protection typically applies to cash deposits up to £85,000 per person per authorised provider. Investments are not typically protected against market losses.
Different types of ISAs
There are several different types of ISAs available in the UK, each designed to suit different saving or investing needs. Understanding the way they work, and the risks involved, might help you decide which could be best for you.
Cash ISA
A Cash ISA works in a similar way to a traditional savings account with the exception that you don’t pay tax on interest, subject to current tax rules and individual circumstances.
Some Cash ISAs offer instant access, allowing you to withdraw money whenever you need it, while others may restrict access to your savings in return for a fixed interest rate. Cash ISAs are generally considered lower risk, and while tax-free interest is a benefit, returns are usually modest and may not keep pace with inflation over the long term.
From April 2027, based on current announced policy, the amount savers under 65 can put into Cash ISAs will reduce to £12,000 per tax year, while the overall ISA limit will remain £20,000.
Scottish Friendly does not provide Cash ISAs.
Stocks and Shares ISA
Stocks and Shares ISAs allow you to invest in the stock market, and any potential gains on your investments and dividends will be tax-free under current rules.
Unlike Cash ISAs, a Stocks and Shares ISA (often referred to as an investment ISA) allows your money to be invested in assets like funds, shares, or bonds. Instead of earning interest on savings, any potential returns will be linked to how investments perform.
This type of ISA offers the potential for tax-free growth, but the value of investments can go down as well as up, and you could get back less than you invest. These ISAs are considered suited to longer‑term investing.
Scottish Friendly specialises in providing Stocks & Shares ISAs.
Lifetime ISA
A Lifetime ISA (LISA) is a Government backed savings account designed to help people with longer-term savings goals.
LISAs are specifically for saving towards buying your first home or for retirement. You can save or invest up to £4,000 per year in total, with a government bonus of 25% on contributions, of up to a maximum of £1,000 a year.
You can only hold one Lifetime ISA at a time, and to open one you must be aged 18 to 39. You can continue contributing until you’re 50, and funds can usually be used either to purchase a first home or accessed later in life for retirement, while withdrawals for other reasons will usually result in a government withdrawal charge.
Scottish Friendly does not provide Lifetime ISAs.
Innovative Finance ISA
Innovative Finance ISAs allow you to invest your annual ISA allowance in peer-to-peer lending, which comes with increased risk. Instead of saving or investing in traditional assets, any potential returns will come from interest paid by individuals or businesses that borrow the money.
While this type of ISA can offer different potential return opportunities compared with more traditional ISAs, it also carries higher risk. Your capital is not guaranteed, and returns depend on borrowers repaying their loans, meaning you could get back less than you invest and there is a risk you could lose all of your capital.
IFISAs are generally considered suitable for experienced investors who are comfortable with investment risk.
You must be 18 or over to open a Cash ISA, Stocks and Shares ISA, or Innovative Finance ISA, as the minimum age for Cash ISAs was raised from 16 to 18 as of April 2024.
Scottish Friendly does not provide Innovative Finance ISAs.
ISA allowance
The annual ISA allowance is the maximum amount you can contribute to your ISAs in a single tax year. This allowance lets you save or invest tax‑free across all the ISAs you hold, rather than per individual account.
For the current tax year, which runs from 6 April 2026 to 5 April 2027, the allowance is £20,000, as set by the UK Government. You can choose how to split your allowance between different types of ISAs, provided you stay within the overall limit.
If you don't use your full ISA allowance in a tax year, you can't carry it over to the next one.
You should also be aware that for most ISAs, withdrawals don’t restore your allowance. For example, if you pay £1,000 into a Cash ISA and then withdraw it within the same tax year, that £1,000 still counts towards your annual ISA allowance, even if your balance returns to £0.
This means you would have £1,000 less of your current year’s allowance available to use, unless the ISA is a ‘flexible’ ISA that allows withdrawn funds to be replaced without affecting your allowance.
Can I have multiple ISAs at one time?
Yes, you can hold multiple ISA accounts at the same time. You might use different ISA types to suit different saving or investing needs – for example, you might have a Cash ISA for shorter-term savings, alongside a Stocks and Shares ISA for longer‑term investing.
You can also hold more than one ISA of the same type. You might one some of your savings in a Cash ISA with one provider, and some in a Cash ISA with a different provider.
What’s important to remember is that all contributions count towards your annual allowance. This allowance applies across all the ISAs you pay into combined during a single tax year, rather than to each individual account. In other words, opening more ISAs doesn’t increase how much you can contribute overall.
As long as the total amount you contribute stays within the full ISA allowance for the tax year, you can split your payments between different ISAs in a way that works for you. How you choose to split your allowance will depend on your individual circumstances. Keeping track of your contributions can help avoid exceeding the limit.
If you do exceed the £20,000 total allowance in a tax year, you risk losing the tax-free status on the excess amount, and will need to declare it to HMRC and take steps to correct this in line with HMRC guidance.
Why do ISA rules allow people to open multiple ISAs?
As of April 2024, you can open multiple ISAs of different types, allowing you to spread your contributions across different ISAs to suit your needs.
Different savings goals
ISA rules allow individuals to hold as many ISAs as they need to reflect different saving and investing approaches, while still keeping overall limits in place (£20,000 annual ISA allowance per tax year, with the LISA £4,000 limit included within that total). This flexibility allows people to make use of whichever combination suits their goals across ISA types with varying features, like risk levels or access options.
Taking advantage of better terms
Being able to open a new ISA without closing existing ones can also make it easier to respond to changes, like switching providers for a better interest rate or starting to invest alongside saving, as long as all contributions stay within the current year’s allowance.
What are flexible ISAs and how do they work?
Flexible ISAs aren't their own 'type' of ISA, instead they're Cash ISAs, Stocks and Shares ISAs, or Innovative Finance ISAs offered by providers who are happy to give you a degree of flexibility when it comes to withdrawing your money - without impacting your annual allowance.
If your ISA is 'flexible', you can withdraw money and replace it within the same tax year without reducing your £20,000 allowance. Availability and features of flexible ISAs depend on the provider and product terms.
It's important to note that Junior ISAs and Lifetime ISAs don't offer 'flexibility' in this way.
Can I have multiple Lifetime ISAs?
Under current rules, you can open more than one Lifetime ISA but you’re only allowed to open and pay into one in a single tax year. This is different from other ISAs; you may be able to hold multiple cash ISAs or multiple investment ISAs with different providers.
Any money you pay into a Lifetime ISA counts towards your overall ISA allowance. If you already have a Lifetime ISA and want to switch provider, you can do so through an ISA transfer.
What happens to ISAs from a previous tax year?
ISAs you opened or paid into during a previous tax year don’t expire when a new one begins. Any money already held in an ISA stays inside what’s known as an ISA wrapper - this is the tax‑efficient structure that sits around your savings or investments.
As long as your money remains within the ISA wrapper, it keeps its tax‑free status under current rules and depending on your individual circumstances.
While you can only contribute a maximum of £20,000 to all the ISAs combined you hold in the same tax year, once you move into a new tax year, you will receive a new ISA allowance. This only applies to new contributions. You can usually continue adding money to existing ISAs or open new ones, provided you stay within the annual allowance for that year.
Can you transfer one ISA to another?
Yes, you can transfer an existing ISA from one provider to another. Your new provider should offer an ISA transfer service that allows you to move money from one ISA to another without losing its tax‑efficient status, or affecting your annual allowance, provided you use the official transfer service.
You can also transfer across most ISA types. You may want to transfer from one type of ISA to the same type (i.e. from one Stocks and Shares ISA to another Stocks and Shares ISA), or from one ISA type to a different type (i.e. a Cash ISA to a Stocks and Shares ISA), depending on what your goals are. You are generally not able to transfer a Lifetime ISA to another ISA type.
It’s important to note that you must use the official transfer process however, rather than withdrawing the money yourself to pay it in again (as this loses ISA protection and may use up your allowance again).
The ISA transfer rules are slightly different if you currently invest with a bank or building society. All banks and building societies must allow ISAs to be transferred out, but they are not obligated to accept transfers in.
Also, if you are transferring a Lifetime or Junior ISA, to another providers Lifetime ISA or Junior ISA you must transfer the whole amount at once.
Transfer an ISA to Scottish Friendly
Is the ISA allowance the same for a Junior ISA?
Junior ISAs are savings or investment accounts that a parent or guardian can set up for under 18s, allowing contributions from anyone once the account is open.
The allowance is different for a Junior ISA compared with an adult ISA. For the current tax year, up to £9,000 per child can be saved or invested into a Junior ISA, under existing UK rules.
The same rules apply regardless of whether it’s a Junior Stocks and Shares ISA or a Junior Cash ISA, but the allowance is separate from the £20,000 annual allowance which applies to adult ISAs, since the Junior ISA allowance and any money paid in belongs to the child, who can access it when they turn 18.
A child can only hold up to two Junior ISAs (one of each type, cash and/or stocks and shares) at any one time. If, for example, your child holds one Junior Cash ISA (Cash JISA) and one Junior Stocks and Shares ISA at the same time, then the £9,000 allowance can be split between them however you choose. Contributions from all parents, guardians, or others count towards the same annual Junior ISA allowance.
Do I have to manage an ISA myself?
You don’t necessarily have to manage an ISA on your own. When you’re putting money into an ISA, you usually have a choice between managing investments yourself or having them managed on your behalf. The right option depends on how confident you feel making investment decisions and your attitude to risk.
Do-it-yourself ISA
A do-it-yourself ISA gives you control over where your money is invested. This approach is commonly associated with a Stocks/Shares ISA, where you choose individual investments like funds or shares yourself.
Some people prefer this option because it offers the ability to tailor investments as they like. However, it also means you’re responsible for selecting investments, monitoring performance, and keeping track of changes that could affect your ISA and any potential returns.
Managed ISA
A managed ISA is designed for people who prefer a more hands-off approach. With this approach, ISA providers make investment decisions on your behalf, usually based on a chosen risk level or investment objective. This can suit people who don’t want to actively manage investments themselves.
Whether you manage an ISA yourself or use a managed option, it’s still important to stay informed. ISA rules and available investments can change over time, and updates or policy changes may affect how ISAs are structured.
Also, if you're managing multiple ISAs at once, it's important to keep track of how much you're depositing in each account to ensure you don't exceed your ISA allowance.
Some key takeaways
You can hold multiple ISAs at the same time, including different ISA types and accounts with different providers.
The £20,000 annual allowance (2026/27) applies across all ISAs you pay into, not per account.
You can split your allowance between ISAs to suit different goals, as long as you stay within the overall limit.
Junior ISAs have a separate £9,000 allowance for the 2026/27 tax year.
Some ISAs have specific rules, like Lifetime ISAs (limits on contributions and withdrawals).
Tax benefits depend on current rules and your circumstances, and exceeding the allowance might affect the tax-free status of contributions.
Important information
The value of stock market investments can go down as well as up, so you or your child could get back less than you’ve paid in.
The funds paid into a Junior ISA belong to the child and can only be accessed by them when they turn 18.
Tax-Free means the investment grows free from tax, with the exception of any tax your provider has already paid on your behalf (for example on dividends from UK shares). Tax treatment depends on individual circumstances and may be subject to change in the future.
This information is for general guidance only and does not constitute personal financial advice.
Scottish Friendly does not provide financial advice. If you’re unsure whether an ISA or Junior ISA is suitable for your situation, you may want to speak to an independent financial adviser.