Got a question about your savings? Email in and we’ll get one of our experts to reply. Anna Bowes, co-founder of Savings Champion, has given her guidance to a reader below. If you have a question for our experts, email us at money@inews.co.uk.
Question: I read that there is a new ISA rule which means I can open two cash ISAs in the same tax year, even if they’re the same type. Is this true as I tried to open a fixed rate ISA and an easy access ISA with my bank but they said I couldn’t do it.
Answer: New ISA rules announced in the Autumn Statement in 2023 came into effect on 6 April this year.
One key thing to note before we address the rest of the question is that what many savers may not realise is that except for an increase in the minimum age of the adult cash ISA from 16 to 18, the other changes are voluntary – the ISA providers do not have to adopt them. And this means there is quite a bit of confusion out there.
So much for these new rules supposedly making ISAs simpler!
The main change is that you should now be able to open and subscribe to more than one of each type of ISA in the same tax year – i.e. you can open more than one cash ISA or more than one stocks and shares ISA – as long as you don’t exceed the overall ISA limit of £20,000.
Previously you could only open one of each type, unless you had opened what is known as a “portfolio ISA”.
Although some providers use a variety of names, with a portfolio ISA you could open more than one account with the same provider, within a single ISA wrapper – thereby not breaching the rules.
This rule was introduced in 2016 and what has become clear is that it is still a useful option for many savers – but few providers have introduced it, even though it’s been possible to do so for eight years.
With the introduction of the latest multiple ISA rule, savers assume that they can open more than one of the same type of ISA with either more than one provider, or with the same provider.
But that’s not necessarily the case. Whilst many will allow you to open an ISA with them even if you have another with someone else that you’ve opened this tax year, this doesn’t mean they have adopted the “portfolio ISA” rule, so you may not be able to open more than one ISA with them – and it looks like this is the situation in this case.
So, unless you want to open both your new ISAs with one of those providers that have adopted the portfolio ISA rule, such as Paragon, Aldermore, Charter Savings Bank, Nationwide and Ford Money to name a few, you may need to open two ISAs with two different providers. This might actually work in your favour though, as the best easy access ISA may not be with the same bank or building society as the best fixed rate ISA.
A last tip would be to check with both providers you are considering, to make sure they have adopted the new multiple ISA rule, as not everyone has yet. You can then make a plan on the best way to maximise your ISA allowance in both deposit amount and interest earned.
