Understanding ISA’s

There’s a few things i’m still unsure on:

  1. If you can only put £20,000 into a isa in one tax year and you don’t fully use up the full £20,000 limit what happens in the next tax year? do you open a new isa or continue using the same, if the later does the maximum get reset to £20,000 or do you still only have a portion of that left to use up?

  2. Can you have more than one isa on the go? and contribute money into different isa’s as long as you don’t go over £20,000 combined?

  3. Is all the money in a isa tax free? so if i put £20,000 into a isa and the isa made £1000 pound i’d now have £21,000 in that isa, is it just the first £20,000 that’s tax free or all of it?

  4. Once you’ve contributed £20,000 to an isa can you never contribute any more money to it ever again even in say 5 years time? you just have to open a new one?

  5. is free trades £3 a month isa charged £3 per isa held or just £3 and you can have as many as you want?

  1. You keep using the same ISA, and can put a further £20K in when the new tax year starts, regardless of what you put in the year before. The remaining unused balance from the last year doesn’t roll-over.

  2. You can have multiple ISAs (I.e. a stocks and shares ISA with Freetrade and a Cash ISA with a high street bank), but you can only add to one ISA in any given FY (you couldn’t contribute to an s&s ISA with Freetrade and another with Vanguard in the same FY).

  3. All gains are tax free :money_mouth_face:

  4. As per point 1, you don’t really ‘open a new one’ if you want to keep contributing - it’s not like opening a new bank account every year. Freetrade even gives you a helpful progress bar of how much you have left to contribute before the end of the financial year, when that status bar resets.

  5. It’s £3/month. As above, they are not different accounts. I have contributed to my Freetrade stocks and shares ISA in 2 different tax years (about to be 3) and I have more than £20K in that “one” ISA.



An ISA is a wrapper around an account. anything inside that wrapper is tax free, that includes anything you add to it, and any gains within the wrapper. So long as its inside the wrapper its tax free.

Each year you get a £20,000 subscription allowance. a subscription is a contribution to an ISA account.
You can contribute (subscribe) to one of each type of ISA within a tax year, and the £20k allowance is over all accounts (not £20k per account).

there are a few types of ISAs

  • S&S ISA
  • Cash ISA
  • Lifetime ISA
  • IF ISA

You can have as many ISAs open as you like, you cannot subscribe (add money/contribute) to more than one of each type per tax year.

so for example.

Today (21/22 tax year). You open a cash ISA with bobs bank, you’ve not used any of your allowance yet. you add £10k to this ISA.

You cannot subscribe to another Cash ISA this tax year. you can only continue to add money to the existing cash ISA (or you can transfer the cash ISA to another provider).

You also open a S&S ISA with Freetrade. You can add up to £10k to this account since you’ve already used £10k of your allowance.

You add £5k to your S&S ISA. You cannot add any money to any other S&S ISAs this tax year unless you transfer your existing S&S ISA. You still have £5k of your allowance left, so you can add money money to your cash or S&S ISA, or to another ISA type.

Next tax year (in a few days time). You lose your £5k remaining allowance as you never used it. You gain back a fresh £20k ISA allowance to add more money.

You’re S&S ISA stock picks magically increased in value to £25k from the original £5k you added.

Remember the ISA allowance its a subscription allowance, its about how much you can add to your ISAs. anything inside the ISA is already inside the ISA, the subscription allowance doesn’t apply. your £20k stock gains are all tax free and have no bearing on your ISA allowance :partying_face:

So you have £20k of your subscription allowance this next tax year.

you can do multiple things. You can continue to subscribe to your existing ISAs. Remember, if you contribute (subscribe) to your existing ISA you cannot subscribe to another of the same type.

You can choose to open a new ISA in this next tax year. so for example, you can open another S&S ISA and contribute to that. if you do so, you can’t contribute to your previous S&S ISA.

some other caveats exists. You can technically open multiple of the same types of ISAs so long as you do not add money to them.

if you want to change provider, you can transfer your ISA at any point, this is within the rules, and continue to contribute to your ISA in your new provider. ONLY if it is a transfer. You can’t open a new isa, sell your stocks, take the cash out, and put the cash in the new ISA. that’s not a transfer.

Hopefully that’s not to long and gives some examples…


… unless you are forgetful
“Oh I’m sorry HMRC I completely forgot I subscribed to another isa at the start of the year… ooopsie :sunglasses:
“No, no, yes ! I promise not to do it again…”


Very thorough and an excellent summary :clap::clap:

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Speaking from experience? :see_no_evil:

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A point that came to me (probably as a result from reading something; I claim no original thought) is that if you are using an S&S ISA for fairly regular trading, you could lose your equivalent ISA allowance if you sell at a loss.

E.g. you put £100 into an ISA, buy £100 worth of stock. You put a stop loss of £80 on that stock, which is triggered by the system. You may have saved yourself further losses, but you’ve lost £20 of your ISA allowance which you can’t get back.

Hope that makes sense (it does to me, although it may well be nonsense to everyone else :smile: :vulcan_salute:)

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