Can I invest in three different ISAs this year or just one?

30 June 2021

Question by Paula

Over the last three years I tried to 'diversify' my exposure by investing in a range of ISA's. The first two years I invested in Fundsmith. Last year I put £10,000 in Vanguard and opened an AJ Bell account. I now find out this isn't in the rules. I am now thoroughly confused. Can I invest in all three ISAs this year or just one?

Answered by Boring Money

Dear Paula,

You can add up to £20,000 every tax year to an ISA. The ISA allowance can be split across ONE cash ISA, ONE stocks & shares ISA and ONE Lifetime ISA (if you are eligible to have one that is) in any given tax year. Therefore you cannot contribute to all three ISAs you have opened in the same tax year as they all are stocks and shares ISAs. You will have to pick one ISA for this year.

Additionally, you can use one ISA account for multiple tax years. For example, you can open an ISA with Vanguard (as you have already done) and add £20,000 to this in the current tax year which runs from the 6th April 2021 to the 5th April 2022. Then from the 6th April 2022 (next tax year) you can add a further £20,000 to this ISA and again a further £20,000 from 6th April 2023 and so on. You therefore do not need to open a new ISA account with a new provider every year to make use of this allowance. You can use the same provider every tax year.

If you want to have more investment choices than just Fundsmith and Vanguard you could transfer these ISAs to your AJ Bell ISA. AJ Bell, like other ‘fund super markets’ (e.g. Hargreaves Lansdown, Interactive Investors etc.) provides a large range of fund choices from various fund managers including Vanguard and Fundsmith.

Answered by

Boring Money