HMRC has warned about an important savings allowance (Image: Getty)
HMRC has shed light on the annual savings allowance for ISA accounts after a saver’s enquiry about their newly opened accounts. The customer asked: “In the past financial year I opened a One Year Fixed Rate cash ISA and a LISA (different banks). Can I also open a stocks and share ISA in the same financial year and pay it to all of them, but not totally over £20,000.”
clarified that savers can put away up to £20,000 each tax year, either in one account or spread across several.
The tax year spans from 6 April to 5 April. Unlike before, when you could only contribute to one of each type of ISA per tax year, now it’s possible to save into multiple of the same kind, with exceptions for Lifetime ISAs or Junior ISAs, where only one subscription is allowed per tax year.
Individuals under 18 are limited to one cash ISA per tax year. Seeking further clarification, the taxpayer asked: “Can I open a cash ISA, LISA and stocks and shares ISA in the same financial year? ” To which responded affirmatively, stating: “Yes, as long as you don’t exceed your £20,000 ISA allowance in any given tax year.”
ISAs offer a tax-efficient way to save, as there’s no tax due on interest or investment growth within an ISA, reports Devon Live.
The Lifetime ISA could be an ideal option for those saving towards their first home, as it offers a 25 percent bonus on any deposits made. With an annual limit of £4,000, this could mean a bonus of up to £1,000.
Currently, the top-paying easy access cash ISA with Moneybox offers a rate of five percent. However, those seeking a fixed rate may wish to act swiftly, as recent drops in the base have led banks to lower their rates.