What are combined cash ISA accounts in the UK?

Cash ISAs are a specific type of savings account that allows the money to grow tax-free while you receive some form of interest rate on top. 

But unlike regular saving accounts, cash ISAs don’t allow new deposits via transfers from other types of accounts. 

They are only intended to keep cash in, not bring more in or take it out. Nevertheless, this rule is still an exception among all the particulars – combined cash ISA accounts.

Combined Cash ISA Accounts

People with more than one type of regular savings account with different providers can move their money into just one place and use it to save in multiple forms without penalty. 

This way, you will avoid having excess amounts held across numerous institutions that you then have to try and work out how much interest you’re earning on each – which can be difficult if you don’t know the ins and outs of every single one.

To do this, you would choose one bank or building society that has an ISA allowance big enough for all your money (often the largest at £85,000) then ask them to set up a combined cash ISA account.   

After it is set up, they will usually send paperwork in the post with details about how much interest you earn each tax year (currently 6th April – 5th April), if any. 

Any interest earned above the £5,000 allowance cap per tax year is subject to 20% income tax. 

Nevertheless, if you pay 40% or 45% tax, you don’t have to pay any income tax on the interest.

If your combined cash ISA account drops below £5,000 during a tax year, you don’t need to take it out and deposit it somewhere else. 

Leave it to rebuild

You can leave it there as long as you want and let it re-build – however, the next time you put it over the limit, remember to set up a new one with a different provider so that you can adequately consolidate your money in this way again.

You should also check if your bank offers what is known as an extended ISA. If they do, they will offer their regular cash ISA (which carries the same interest rates). 

Still, they might also offer an extended cash ISA that allows you to save more money throughout the year without affecting the limit. 

The annual savings limit for this is £15,240, and if you plan on putting your combined ISA accounts into one extended account, you need to bear in mind that only one provider will give a tax-free allowance for it each year.

Regular and extended ISAs

Some providers offer both regular and extended ISAs, but not all do, so it’s worth checking before opening up a new account with them as their rates may be lower than those of other providers. 

However, as long as you hold an account with any bank at any time during a financial year, they will consider it valid even if you haven’t opened up an extra one with them too. 

It means that anyone can still take advantage of the annual ISA allowance as long as they meet the eligibility criteria.

Use an aggregator

Before you make any significant transactions, such as putting all your money in one account with a provider, it might be better to use an aggregator. 

Like Money Dashboard first and check how much interest will be earned over a year across all your cash ISAs. This way, you can see if it’s worth consolidating them into one place or not before going ahead.

If you have more than one cash ISA, why not consolidate them into one? 

It’ll save time and effort managing all those accounts and providers – meaning you have fewer people to contact if anything goes wrong, for example. 

If this has been on your mind recently but still haven’t done anything about it, it’s worth considering before the end of the 2015/16 tax year as you can only hold one cash ISA per year.

For more information, link to Saxo.