| There are two types of ISA account, a Maxi and a Mini, and you must choose one
or the other. You cannot open both a Maxi and a Mini in the same tax year.
The Maxi
You can buy your ISA as a "one stop" Maxi account. This must offer stocks and
share investment options and may also offer cash savings and/or insurance.
You can put your whole £7,000 ISA allowance into share-based investments in
a Maxi. Or you can split your money between cash and/or insurance and shares,
if those options are available. If you split it, you can put up to £3,000 in
cash and £1,000 in insurance, with the balance in share-based investments.
Beware: Once you have opened a Maxi ISA account, you have to place
your entire year's ISA allowance with that provider, even if you only save £100
in it. You can't open a Maxi stock market ISA and then go and start a cash ISA
elsewhere.
The Mini
You can open up to three separate Mini ISAs (cash, insurance and stocks and
shares) all in the same tax year. But you can only open one of each type. The
limits on Mini ISAs are £3,000 each in cash and stock market ISAs and £1,000
in an insurance ISA.
Beware: By opening a Mini cash ISA account you have lost £1,000 of
your stocks and shares allowance - because you can only open two Mini ISAs with
£3,000 each, rather than giving yourself the chance to invest, say, £5,000 in
shares and £2,000 in cash.
- If you already have an ISA, make sure you know which type it is before you
buy another.
- Tell the manager of any ISA you plan to buy about any others you have.
Which is better: Mini or Maxi?
- Choose a Maxi if you want to put all your ISA money into the stock market.
- Choose a Mini if you want the flexibility to shop around for the best cash
ISA rates, and are happy with the £3,000 a year limit on your share ISA.
Getting it wrong
It is vital to understand the rules about Mini and Maxi ISAs. If you have made
a mistake, perhaps by taking out a Mini cash ISA and a Maxi stock market ISA,
you will be allowed to keep one, but the other will revert to a taxable investment
or savings account. You will also have to pay back the tax you have saved.
Avoid making mistakes by following these rules:
- If you already have an ISA, make sure you know which type it is before you
buy another.
- Tell the manager of any ISA you plan to buy about any others you have.
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