News, Culture & Society

Can I open a new stocks and shares Isa and continue paying into one I opened last year?

Can I invest in a new stocks and shares Isa, and continue paying into the one I opened in the last tax year?

I have a stocks and shares Isa with a DIY investing platform where I can pick and choose the funds, trusts and shares myself. I opened this last November, so during the 2019/2020 tax year.

This platform has been good for my needs and I’d like to continue using it, but I am thinking about opening another account with a different provider.

Can I open a new stocks and shares Isa now that we have entered the new tax year and pay into that, but also continue paying into my current one? Via email

A This is Money reader asks if they can pay into two stocks and shares Isas in the same tax year

Jayna Rana, of This is Money, replies: It’s good to see that you are doing your research on the benefits that different types of Isa, or individual savings accounts, have to offer.  

Every tax year you have an Isa allowance that lets you save or invest a certain amount of money without paying tax on your returns.

For the 2021/2022 tax year, the Isa allowance is £20,000. It was the same in 2019/2020. 

You can pay this in full into either a cash Isa, an investment Isa (also known as a stocks and shares Isa) or an innovative finance ISA.

Alternatively, you can split your allowance, using it as you wish across the three different types of Isa (or four, if you include a Lifetime Isa which has a pay-in limit of £4,000 each tax year). 

When a new tax year starts you will have a brand new Isa allowance. The current tax year started on 6 April 2021 and ends on 5 April 2022. Any unused Isa allowance from last year cannot be carried forward to this year. 

For stocks and shares Isas, you can indeed open a new one with a different provider each tax year if you want to. However, you cannot pay into both during the same tax year. 

As you opened a stocks and shares Isa in November last year, you can open another with a different provider this tax year – provided you haven’t already done so after 6 April.

If you have been paying into one stocks and shares Isa since 6 April, you cannot pay into another one – including your old one that you opened in 2020 – until 7 April 2022.

What you can do though, is pay into another cash Isa with a different provider, so long as you don’t go over the £20,000 Isa allowance across these accounts. 

Sarah Coles, personal finance analyst at Hargreaves Lansdown, adds: The rules mean you’re only allowed to pay into one Isa of each type every tax year – and your £20,000 annual allowance is split between them. 

So you could have a stocks and shares Isa with one provider and a cash Isa with another, but you couldn’t pay into two stocks and shares Isas or two cash Isas in the same tax year.

You can, however, open a stocks and shares Isa with one provider and pay into it in one tax year, and then open one with a different provider the next tax year. As long as you’re not paying into both in the same tax year, you’ll be within the rules. 

It’s worth considering why you want to use a second provider though. The more different investment platforms you use, the harder it will be to stay on top of your investments. 

If you want something that does the same as your existing Isa, you can just pay this year’s allowance into your existing Isa. If there are specific reasons why you want to switch, you may be able to transfer your old Isa too, to keep everything in one place.

Jayna Rana, This is Money, adds:  Stocks and shares Isas can vary between providers, from the cost to the investment products available, the quality of customer service and many other factors.

And once you’ve chosen one, subject to cooling-off period rules and individual terms and conditions, you’re stuck with it for the remainder of the tax year. 

That’s why it’s always worth doing your research before taking that first step. Check out This is Money’s guide on how to choose the best (and cheapest) DIY investing Isa which also includes our pick of the platforms.



Read more at DailyMail.co.uk