See Personal Savings Allowance (PSA) 

Currently unless youre a top tax rate payer and you’ve already used your yearly PSA allowance then a CASH ISA might not be the right product for you. You can probably get more cumulative interest using a high rate normal savings account.

For top-rate taxpayers or bigger savers who’ve used their PSA, then there are tax advantages of saving using a cash ISA.

– Basic-rate taxpayers over the PSA limit. For every £100 interest you earn in savings you get £80. When using an ISA you get the whole £100. The normal savings rate has to be 25% higher for it to be better than a cash ISA.

– Higher-rate taxpayers over the PSA limit. For every £100 interest you earn from normal savings you get £60, Using an ISA you get all of it (£100). Therefore the normal savings rate would have to be 66% higher for it to a better investment than a cash ISA.

– Top-rate taxpayers. For every £100 interest you only get £55, whereas in an ISA you get the whole £100. Therefore the normal savings rate has to be 82% higher in order to beat a cash ISA.

In alignment with HM Revenue & Customs regulations , you can only have one current year’s cash ISA open at any time. But you can have multiple old ones with different providers, or you can have a cash ISA, a stocks & shares ISA, an innovative finance ISA and a Lifetime ISA all at the same time.

If you are looking to transfer, DO NOT withdraw money from a CASH ISA. This will impact any tax benefits.

Generally historical  ISAs now pay terrible rates so its important that you plan to move your investment each year. Consolidating new and old cash ISAs into one new ISA at the best rates available will ensure the best return on your money and will also simplify the process next year.

If you think you may need to withdraw cash from your ISA at any point then look out for flexible Cash ISAs. This should mean you can withdraw and replace cash withdrawn from them in the same tax year without it using up your year’s ISA allowance.

This means that if you had £1,000 in a flexible cash ISA you could withdraw £500 and replenish it later in the tax year without affecting your ISA limit.

As long as the money stays in the CASH ISA then it remains tax free for ever. Therefore its important that, if you can, you use your full allowance each year. 

By topping up and using your CASH ISA and taking some effort each year to consolidate and find the best rates then you can ensure in the future you have a substantial tax free sum.

You cannot pay into more than one ISA of the same type in the same tax year. However you can open a stocks and shares ISA, for example, with one provider, leave that money to grow while opening another one with a new provider in a new tax year

Money held in a cash ISA can be transferred into another cash account or into a stocks & shares ISA, and likewise, assets held in a stocks & shares ISA can be switched back into cash should you wish

Both a SIPP (Self-Invested Personal Pension) and an ISA (Individual Savings Account) offer tax-efficient ways to grow your money, allowing you to invest in a variety of funds, shares, and bonds while earning tax-free investment returns. However, there are key differences to consider when choosing between them.

The most significant distinction lies in accessibility. With an ISA, you can withdraw your money tax-free at any time, providing flexibility. In contrast, a SIPP is designed for retirement savings, meaning you cannot access your funds until at least age 55 (rising to 57 from April 2028). Even then, only 25% of your SIPP can be withdrawn tax-free, with the remainder subject to income tax.

Another major difference is tax relief. While an ISA allows unrestricted access to your savings, it does not offer any contribution bonuses. A SIPP, on the other hand, benefits from government tax relief, effectively boosting the amount you invest. This can make it a more attractive option for long-term retirement planning.

If you’re looking for something in between, a Lifetime ISA (LISA) could be worth considering. It offers a government bonus on contributions, similar to a SIPP, but withdrawals before age 60 (unless used to buy your first home) incur a penalty. Deciding between an ISA, SIPP, or LISA depends on your financial goals, particularly whether you prioritize accessibility or long-term tax advantages.

A SIPP (Self-Invested Personal Pension) gives you full control over how much you contribute to your pension and where you invest your money. One of its biggest advantages is tax relief—any personal contributions receive a 20% government top-up, meaning if you pay in £8,000, the government adds an extra £2,000, which can also be invested.

Higher earners paying 40% or 45% income tax can claim additional tax relief through HMRC, typically via self-assessment. While this tax relief is generous, there are limits. You can only contribute up to the amount you earn each year, and tax relief is only available until age 75.

Another important factor is the pension annual allowance, which is currently set at £60,000 per tax year across all your pensions. However, for high earners (usually those with incomes above £260,000), this allowance is gradually reduced, with a minimum threshold of £10,000.

Yes, you can hold multiple ISAs across different providers, including Stocks and Shares ISAs, Cash ISAs, and Innovative Finance ISAs. However, there are restrictions when it comes to Lifetime ISAs and Junior ISAs. While providers may limit how many of a specific ISA type you can open or contribute to with them, you are free to open additional ISAs of the same or different types with other providers.

Over time, it’s easy to accumulate multiple ISAs, even if they are of the same type. There’s no limit to how many ISAs you can open throughout your lifetime, but managing multiple accounts can become more complex.

How Many ISAs Can You Pay Into Each Year?

Each tax year, you can split your annual ISA allowance of £20,000 across different ISA types. However, this allowance applies to all your ISAs combined, not per individual account. You can contribute to multiple ISAs within the same year as long as your total deposits stay within the £20,000 limit.