A stocks and shares ISA provides a tax-efficient way of investing. Any investment growth or income earned in an ISA product is typically tax free. But can you have more than one stocks and shares ISAs at the same time? Let’s take a look.
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What is a stocks and shares ISA?
A stocks and shares ISA is essentially a tax wrapper that can be put around a wide range of investment products. Any investment income you make in the ISA is sheltered from UK income tax and capital gains tax.
That said, it’s important to remember that tax rules can change and that the benefits will depend on your individual circumstances.
Some of the investment products that you can hold within a stocks and shares ISA include:
- Individual shares
- Exchange-traded funds (ETFs)
- Corporate and government bonds
- Unit trusts
- Investment trusts
- OEICs (open-ended investment companies)
Every tax year, there is a maximum amount you can put into your ISA. This is known as your ISA allowance. In the 2021/2022 tax year, the ISA allowance is £20,000.
Any unused ISA allowance from the previous year cannot be carried over to the following year, so be sure to use up your entire allowance when possible to reap maximum tax benefits.
Can I invest in more than one?
No. You can only pay into one stocks and shares ISA each tax year. However, you can still pay into other types of ISA, but only one of each type every tax year.
So, in the same tax year, you can pay into one:
- Stocks and shares ISA
- Cash ISA
- Lifetime ISA
- innovative finance ISA
- Junior ISA
However, your total ISA investment across all types of ISA in one year must not exceed your allowance of £20,000.
Also, while you can only pay into one stocks and shares ISA every tax year, you can open a new one with a different provider each year if you want to.
For example, you may decide to switch ISA providers in search of:
- Lower fees and charges
- Better service
- Exposure to a wider range of investment choices
Or you may just want to consolidate your ISA accounts.
When you open a new stocks and share ISA, you can’t pay into your old one during the same tax year.
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Which stocks and shares ISA is best for me?
It’s in your interest to choose a reputable provider that is affordable and has values that align with your investing goals and strategies.
To help you narrow down your choices, we have compiled a list of some of the top-rated providers of stocks and shares ISAs in the UK.
Of course, before you make any investment, ensure that you have done your research. While a stocks and shares ISA can help you save on tax, it won’t help you if you happen to make poor investment choices that end up losing you money.
If you are completely new to the concept investing, it might be worth checking out this comprehensive investing guide on our sister site, The Motley Fool, to get you up to speed.
