Opening multiple ISAs of the same type in the same tax year

benchesh

The internet is confusing when it comes to what you can and can't do with ISAs. Most of us know you can only subscribe to one ISA of every type in a tax year. But what does "subscribe to" really mean? Some articles say you can't open more than one. Some articles say you can open as many as you like as long as you don't deposit brand new money (money that isn't being transferred internally between ISAs) into more than one. This distinction is extremely important and yet it's not one that's made particularly clear. ISA transfers, especially partial ISA transfers, complicate matters further.

My understanding
While you can only pay new money into one of every type of ISA in a tax year, you can open as many ISAs as you like as long as you're transferring money internally between ISAs. If you pay new money into an ISA and you wish to then transfer that ISA, you can ONLY do an ISA transfer if you're transferring money from previous tax years, otherwise you must transfer the ENTIRE balance (ie doing a full transfer). If you pay new money into Cash ISA 1 and then do a full transfer to Cash ISA 2, you can continue to pay into Cash ISA 2.

There are some specific scenarios I'd like to clarify. Hopefully the answers will help other people out too.

Scenario 1:
In a previous tax year I deposited into S&S ISA 1. In this tax year I open & pay new money into S&S ISA 2. In the same tax year, can I then open S&S ISA 3 and do a partial transfer of S&S ISA 1 into it? In the same tax year, can I open S&S ISA 4, 5, 6 and do the exact same thing, all using S&S ISA 1? Can I open Cash ISA 1 and do a transfer of S&S ISA 1 into it and then pay new money into cash ISA 2?

Scenario 2:
In a previous tax year I deposited into Cash ISA 1. In this tax year I pay new money into Cash ISA 1. In the same tax year, can I then open Cash ISA 2 and do a partial transfer of Cash ISA 1 into it, using money that was already deposited in a previous tax year? After that, can I then open Cash ISA 3 and do a full transfer of the remaining balance of Cash ISA 1 into it? After that, can I then continue to pay new money into Cash ISA 3 (as Cash ISA 1 no longer exists).

Scenario 3:
In this tax year I pay new money into Cash ISA 1. I then do a full transfer of Cash ISA 1 into S&S ISA 1. As Cash ISA 1 no longer exists, can I open and pay new money into Cash ISA 2?

Thanks to anyone who can provide insight into any of the above.

masonic

Your understanding is correct. Subscribing is adding new money that will count against your current year ISA allowance. Opening is not subscribing, and there is no limit on the number of ISAs you can open.

You can do all of the things in your scenarios within the ISA rules.

isasmurf

You need to make a distinction between the ISA and the account to hold an ISA as they are not the same thing and that is largely where the confusion around opening multiple ISAs for transferring arises. This distinction is important as you can open as many accounts to hold an ISA as you like, but you can only open 1 ISA of each type a year. The accounts to hold an ISA are the accounts that banks, building societies and investment managers label with ISA, so that money held in these accounts are separate from non-ISA money. But these accounts are not the ISA. The ISA is an invisible wrapper around the money. A new ISA will only ever be created and opened when it has received the first deposit in a tax year from outside the ISA. 

Opening an 'ISA' account to hold an ISA, and then transferring an ISA consisting only of previous year money without making any further deposits, or transferring an ISA containing current tax year deposits and making further deposits is not opening a new ISA. 


The first deposit in a tax year you make to an account to hold an ISA with provider A will open the ISA for the tax year. This ISA can then be transferred to provider B and deposits continue to be made to provider B. On transfer no new ISA is opened as it is the same ISA as opened with provider A, but is now managed by, and held with, provider B. The can be continued to be transferred, keeping all current tax year deposits together, as many times as you like with any further deposits being made to the provider currently holding and managing the ISA.  In summary, the ISA will be opened on the first deposit made in the tax year with provider A and then can be moved around other providers. It will be the same ISA being moved around, rather than a new ISA being created each time, but it can be treated as if it had been opened with whichever provider it is currently with and no ISA had been created with a previous provider. 

Money deposited in an ISA in previous years along with it's interest can be moved, split up into smaller ISAs with different providers and separated from any current year deposits as you please. HMRC are not interested in what you do with previous year deposits as long as they remain within an ISA. 

Albermarle

The internet is confusing when it comes to what you can and can't do with ISAs

If you have a question about ISA's this forum is a better source of info than most. A scroll through the threads should clarify most issues.

e.g. Cash ISA transfer only - without new subscription — MoneySavingExpert Forum