Your ISA questions answered

If you are investing with Smart Investor, you’re already taking steps to try and grow your money.

While the world of investments can feel like a confusing place, it doesn’t have to be. We are on hand to answer your questions – and we’ve done some digging to find out the kind the questions our customers typically ask us about managing their Investment ISA, also known as a Stocks and Shares ISA.

This time, Clare Francis, our in-house Investment expert answers some of the recurring questions we receive over the course of a tax year.

Q. Can I pay into multiple ISAs?

The menu of ISAs available means that there’s a chance you might want to choose more than one type for your savings and investments, depending on your circumstances, attitude to risk and goals. There’s the choice between an Investment ISA, Cash ISA, Lifetime ISA or Innovative Finance ISA.

Until April 2024, the rules from HM Revenue & Customs stated that an individual could only open or pay into one of each type of ISA in any one tax year.

Changes implemented at the start of the 2024/2025 tax year, on 6 April, mean that UK adults can open and pay into multiple ISAs of the same type, as long as they don’t exceed the annual £20,000 limit per person, per tax year.

Q. Does Barclays let me open more than one type of ISA?

While these are the rules set by HMRC, there’s no requirement for ISA providers to allow more than one to be opened. So, before you make an application for a second ISA of the same type, make sure the provider you’ve selected allows multiple accounts to be held.

At Barclays, we will allow customers to open an ISA with us even if they have already subscribed into an ISA with another provider. This means that you can open an Investment ISA with us to try us out, even if you are paying into another Stocks and Shares ISA elsewhere (and as long you’re aware your maximum total investment limit is £20,000, as stated earlier). You cannot, however, open more than one Investment ISA with Barclays.

Currently customers are unable to subscribe into multiple cash ISAs with Barclays in the same tax year, but we are looking to introduce this functionality later in the year.

Q. Do the same rules apply for Junior ISAs?

The rules for multiple ISAs don’t extend to Junior ISAs. You can open no more than one of each type of Junior ISA in one tax year – one Cash and one Stocks and Shares. The annual Junior ISA allowance of £9,000 can be split between the two types. We currently do not offer a Junior ISA on Smart Investor.

Q. If I take money out of my ISA, can I pay it back in?

If your ISA is 'flexible', you can take money out then put it back in during the same tax year without reducing your current year's allowance. At Smart Investor, our ISA is flexible, but not all providers offer the same flexibility, and some may only apply it to specific products. It’s worth checking before you open an account if you think it’s a feature you might make use of.

As an example, with your annual ISA allowance at £20,000, let’s say you pay £10,000 into an ISA during the 2024 to 2025 tax year. You then take out £5,000.

Following that withdrawal, the amount you can now put in during the same tax year is £15,000 if your ISA is flexible, which is the remaining allowance of £10,000 plus the £5,000 you withdrew. If we use the same example, but your ISA is not flexible, you will only be able to pay in the remaining allowance £10,000 during that tax year.

Q. What should I be aware of before withdrawing from my ISA?

While withdrawals might allow you to retain tax benefits if your ISA is flexible, it’s worth checking the terms of your ISA to see if there are any rules or charges for making withdrawals. This would usually only be the case with a fixed rate Cash ISA which might require you to leave your money for a fixed period. If you’re unsure, check with your provider.

There are no charges for making a withdrawal from an Investment ISA on Smart Investor but you might incur trading fees when you sell investments.

It’s also worth bearing in mind that if you sell some of your investments to take money out of an Investment ISA, you’ll then be out of the market for a period of time. If the stock market rises during that time, you’ll lose out on some gains and could end up re-investing when prices have gone up. Of course, the reverse could happen, and markets could fall meaning you might find you’re able to reinvest at a lower level. Ideally, you want to try and keep your money invested for the long term rather than coming in and out of the market, as it reduces the risk of losses as your money has longer to grow.

Be aware that there are different rules on withdrawals from a Lifetime ISA. A Lifetime ISA is not a flexible account so you will not be able to withdraw money and later pay it back in. Plus, you need to be aware of the rules around withdrawals. While money in a Lifetime ISA can be used for buying a first home or for retirement after the age of 60, withdrawals for any other reason are subject to a 25% penalty (aside from if you are terminally ill). We currently do not offer a Lifetime ISA on Smart Investor.