I had an existing cash Isa with Santander, and recently opened a new cash Isa with Nationwide.
I have put cash into both Isas this financial year, but haven't exceeded the limit. I've recently been told this isn't allowed under Isa rules
Is this correct, and if so what is my best course of action?
M. Lowe, email
In short, this is against the rules. You can only open and pay into one cash Isa and/or one stocks and shares Isa each financial year and the total sum cannot exceed the 2015/16 limit of £15,240.
When applying for an Isa, you should declare your existing subscription as providers will not have this information.
Nationwide provide the following declaration for online applications and ask customers to tick the box to agree:
I apply for a cash ISA for the tax year 6th April 20(XX) to 5th April 20(XX) and each subsequent tax year as required.
I have read and agree to the declaration.
I declare that:-
c) I have not subscribed, and will not subscribe, more than the overall subscription limit in total to a cash ISA and a stocks and shares ISA in the same tax year;
d) I have not subscribed, and will not subscribe, to another cash ISA in the same tax year that I subscribe to this cash ISA
Source: Nationwide
If another account is mistakenly opened, the error will not be flagged up until the provider submits its annual subscriptions to HMRC.
Once the mistake has been identified, HMRC will contact you and advise which account needs to be closed. It is best to wait until HMRC contacts you as there is a risk that you may close the wrong account. A spokesman from HMRC said the message is “sit tight and expect contact”.
However, while savers can only open one new cash Isa each tax year, it is possible to switch to a different provider if you find a better rate. Check whether the Isa you want allows transfers and, if so, you can make the switch as long as you move all of the money out of the original Isa and close it.
While Isas remain a good option for savers, customers who have reached the annual limit may also want to consider other alternatives, especially considering the upcoming introduction of the new Personal Savings Allowance in April 2016.
Tom Adams, from SavingsChampion.co.uk says: "With the new allowance, you may be able to earn up to £1,000 in interest tax-free from a normal savings account, depending on your tax circ*mstances.
“With many accounts paying annual interest after April 2016, if you open the account today, you may be able to, in effect, take advantage of the new allowance already.”
• Have a question for our experts? Email [email protected]
• The best of Telegraph Money: get our weekly newsletter