Stocks and shares ISAs are a great tool to help you maximise investment returns – but they come with strings attached. We explain one of the key restrictions: the limits on how many you can open per tax year.
What is a stocks and shares ISA?
A stocks and shares ISA lets you invest within the tax-free wrapper of an ISA. You can use a stocks and shares ISA to buy different types of investment, including funds, bonds and (as the name suggests) stocks and shares.
Just as the interest you make on cash ISA savings is always tax free, you don’t pay tax on any returns you make on investments in a stocks and shares ISA. So you’ll never pay income tax on any government or corporate bonds, capital gains tax on any profit you make from the sale of shares or funds or dividend tax on any dividends you receive from shares.
The rules on stocks and shares ISAs don’t only apply to this type of ISA. They apply across all ISAs you own. The following are the key things you need to know:
There is a limit on how much, in total, you can contribute to ISAs each year. This is known as the ISA allowance. For the 2024/2025 tax year, the allowance is £20,000. The limit applies to how much you can pay in – there’s no limit on how much interest or investment returns you can make. However, if the value of your annual investments falls below the £20,000 you’ve paid in, you can’t top this up.
You can divide your ISA allowance as you wish across the 4 different types of ISA: cash, stocks and shares, innovative finance and lifetime ISAs. You can only pay up to £4,000 into a lifetime ISA.
You can only make new contributions into one of each type of ISA per tax year. So if, for example, you paid £10,000 into one stocks and shares ISA early on in the tax year, you couldn’t pay the remaining £10,000 of your allowance into a different stocks and shares ISA later in the year. You’d have to pay it into the same stocks and shares ISA, or into a different type of ISA. That “new money” point is important though. More on this later.
Can I open more than one stocks and shares ISA per year?
Just to be clear, by “year” we mean “tax year”. The tax year runs from 6 April one year to 5 April the following year.
And no, you usually can’t open multiple stocks and shares ISA per tax year.
There are a couple of caveats though.
Firstly, if you inherit an ISA that someone has left you in their will, then you can open a new ISA to transfer the investments into.
Secondly, you may be able to pay into one ISA in a tax year and then decide it is no longer the best option for you. In this case, you can transfer your ISA to a new provider. The new provider will count as your “one” ISA, and you can make new contributions up to your total ISA allowance. You have to transfer the full ISA holdings though. You can’t transfer only part of an ISA you’ve already paid into in that tax year.
What happens if I pay into more than one stocks and shares ISA in a year?
It’s surprisingly easy to accidentally break the “one stocks and shares ISA per year” rule. Perhaps, for example, you’re a bit absent-minded with dates, and unthinkingly make a small top-up to an existing stocks and shares ISA on 6 April (the day after the previous tax year ends). Let’s say you then forget about ISAs for a while until a tempting ad a few months later prompts you to think about opening a new one. You duly do so and start paying in, without even thinking about the small top-up you made months ago.
As soon as you realise you’ve inadvertently broken any rules, call HMRC’s ISA helpline on 0300 200 3312 for advice on what to do. Don’t try and fix it yourself, for example by closing one or both ISAs. You may land yourself in even deeper water.
If you don’t tell HMRC proactively, it will probably find out when it checks individual records at the end of the tax year. Even at this point, chances are you’ll just be let off with a warning (provided you’re not a repeat offender), but better safe than sorry.
Can I have more than one stocks and shares ISA in total?
Yes, you can. Although you can only open (and make new contributions to) one stocks and shares ISA per tax year, there’s nothing stopping you from opening a new stocks and shares ISA each tax year. So, in theory, you could have as many stocks and shares ISAs as years you’ve made ISA contributions.
When can I open a new stocks and shares ISA?
When a new tax year begins, you’ll have a fresh £20,000 ISA allowance. Even if you’re happy with your current stocks and shares ISA, you may decide it’s time to ring the changes with a new provider.
Even if you see tempting offers from ISA providers towards the end of the current tax year, if you’ve already paid into a stocks and shares ISA that year, you’ll have to wait until 6 April to open a new one.
Can I pay into more than one stocks and shares ISA per year?
No. You can only make new contributions to one stocks and shares ISA per tax year (though, as we’ve outlined above, you may be able to transfer an ISA that you open and then change your mind about in its entirety. In this case, the provider you transfer to will effectively become the one stocks and shares ISA you’re allowed per tax year).
Even if you have different stocks and shares ISAs from previous tax years, you can’t pay into them if you’ve opened a new one for the current tax year.
You can, however, pay into multiple different types of ISA – cash, stocks and shares, innovative finance and lifetime ISAs. You can only pay into one of each per tax year.
Can I transfer stocks and shares ISAs from previous years into a new ISA?
Yes! This is one of the few aspects of ISAs for which there are no official limits or restrictions. So if, for example, you spot a provider with much lower investment fees than the ISAs you’ve opened in previous tax years, you may wish to transfer old balances to take advantage of this.
If you transfer an ISA that you have paid into during the current tax year to a new provider, you must transfer the whole balance. But if you’re transferring ISAs from previous years, you can choose whether to transfer the full amount or only part of it. There are no restrictions on how often you can make transfers – though it would probably be a hassle to do it too often. It’s also unlikely to be worth chopping and changing too regularly, especially as the pros and cons of different stocks and shares ISA providers may not be as clear cut with cash ISAs.
You can also transfer between different types of ISA, if you wish. For example, you could transfer a cash ISA into a stocks and shares ISA, or vice versa.
Regardless of what and how much you’re transferring, it’s important to do so via the official ISA transfer process. You’ll lose the tax advantages if you simply take the money out and pay it into a new provider. It will count as a new contribution rather than a transfer, and eat up your annual ISA allowance.
And bear in mind that although there are no official restrictions on transfers, ISA providers are not obliged to allow transfers in. They have to allow transfers out, though.
What’s the point of having more than one stocks and shares ISA?
It’s a good question. Having multiple financial accounts of any type gives you more to keep track of, so is arguably more effort. If you’re happy with an existing stocks and shares ISA, you might question the point of opening a different one.
That said, offers do change over time and new providers enter the market. Even if you picked the best possible ISA at the time, a provider may launch a new option with lower fees, a slicker service or a wider range of investments that interest you, for example. This could be enough to tempt you to try out its offering by opening a new account, without necessarily wanting to take the plunge of transferring your existing ISA. For the time being, at least.
Even if, in this example, you might eventually want to consolidate all your stocks and shares ISAs into the one that works best for you, for some there may still be good reasons to hold money in separate ISAs. Once you’ve paid the money in, there are no restrictions on what you can do with it within the confines of the ISA – buying and selling investments as often as you wish, in accordance with your investment strategy. Different ISAs will have different investments available, so having 2 or more ISAs may enable you to diversify your portfolio more than you’d be able to with just one.
Having 1 or more separate stocks and shares ISAs is a personal choice. Just make sure that it’s a conscious choice, made for the right reasons, rather than just not getting around to transferring accounts you’re no longer happy with.
Bottom line
If you want to maximise the returns on your investments, the tax-free returns offered by a stocks and shares ISA can make it a great way to do so. But it’s important to avoid falling foul of the rules and restrictions, or you risk losing some of your tax-free benefits and potentially incurring the wrath of HMRC. The tips in this guide will help you stay on the tax man’s good side.
Finder survey: Do you currently have any form of ISA?
Response
Yorkshire and the Humber
West Midlands
Wales
South West
South East
Scotland
Northern Ireland
North West
North East
Greater London
East of England
East Midlands
No
58.82%
51.3%
53.03%
52.17%
54.97%
42.11%
45.83%
61.16%
64.29%
40.74%
54.02%
46.59%
Yes
41.18%
48.7%
46.97%
47.83%
45.03%
57.89%
54.17%
38.84%
35.71%
59.26%
45.98%
53.41%
Source: Finder survey by Censuswide of 1032 Brits, December 2023
Frequently asked questions
Yes. While you can only open and pay into one stocks and shares ISA per tax year, you can hold as many stocks and shares ISAs as there are tax years (assuming you pay in each year). And, if all goes well, the investments in each of your ISAs will grow over time. So you could make money from lots of different stocks and shares ISAs. Of course, as with any investment, there is also a risk that your stocks and shares ISAs won’t perform as well as expected, and you could even lose money. But that’s the point of long-term investing, as it evens out volatility and increases your chances of reaping rewards in the long term.
As with accidentally opening more than one stocks and shares ISA, exceeding your allowance is surprisingly easy to do, especially if you’re paying into several types of ISA. If you realise you’ve tipped over your allowance, contact HMRC as soon as possible on 0300 200 3312. It’ll advise you on what to do.
Yes. As an adult, you can hold up to 4 different types of ISA: cash, stocks and shares, innovative finance and lifetime. You can open and pay into one of each kind each tax year. Your total contributions across all the types of ISA you pay into can’t exceed £20,000 per year. The maximum annual contribution to a lifetime ISA is £4,000.
Ceri Stanaway is a researcher, writer and editor with more than 15 years’ experience, including a long stint at independent publisher Which?. She’s helped people find the best products and services, and avoid the pitfalls, across topics ranging from broadband to insurance. Outside of work, you can often find her sampling the fares in local cafes.
In 2021/2022, a third (33%) of all ISA subscriptions were to stocks and shares ISAs. How many Brits have one?
Feedback
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Advertiser Disclosure
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
