Torn between easy-access and fixed cash ISAs? Find out how to open both

Under ISA rules, savers are only allowed to deposit their annual cash ISA allowance into one cash ISA each tax year (see our ISA Allowance guide for the rules).

But Aldermore Building Society, Kent Reliance, Marks & Spencer Bank, Nationwide and Newcastle Building Society now allow savers to split their annual ISA allowance into both a fixed ISA and an easy-access one. Nationwide also lets savers split cash between its easy-access regular saver ISA.

So using this loophole, you could open multiple ISAs in the same tax year, all for new money.

The top pick is Nationwide, which lets you open its 1.5% easy access ISA* and its 2.5% regular saver ISA* – both best buys – as well as its fixed ISAs at 1.5%- 2.5% (1-5 years). See our Top Cash ISAs guide for the best buys.

HM Revenue & Customs (HMRC) confirms that as long as you split your allowance of £5,960 (rising to £15,000 from 1 July) into ISAs with the same provider, splitting cash at one of these five providers – which are the only major UK providers to allow this – will count as depositing new money into one single cash ISA.

If you open an ISA with any other provider, you can only put money into one ISA.

It means savers no longer have to choose between locking money away for a few years in a higher-paying fixed ISA, or getting a lower-paying easy-access ISA.

Here's how the deals compare:

How do I open multiple ISAs and split my allowance?

If you want to open multiple cash ISAs with the same provider, the process is no different from opening one cash ISA for new money.

You just need to open the accounts via the normal channels and deposit the cash. It's the ISA provider that will let HMRC know you've split your new money allowance between its various products.

Should I split my ISA cash?

If you want the higher rate of a fix, but think you may need instant access to some of your money, you should consider splitting your cash between Nationwide's easy-access ISA at 1.5% or its regular ISA at 2.5%, while also locking away some money in its two-year fix at 2.05%.

Whether or not to go for the easy-access or regular saver depends on how much you want to save. Those who want to keep less than £6,250 in easy-access ISA savings will earn more with Nationwide's regular ISA, while those with more are better off with Nationwide's easy-access product.

If you're thinking of opening Nationwide's regular saver ISA, you can also only deposit a maximum of £1,250/month into it.

Once open, Nationwide's easy-access and fixed ISAs allow you to transfer in old ISAs, although you can't do this with its regular saver (see our ISA Transfers guide for how to do this).

If you know you don't need easy access to your cash, you should consider fixing your money in order to get the top rates, although bear in mind that some providers only let savers deposit cash into fixed ISA accounts for a few months after the ISA limit increases from 1 July.

So if you want to deposit cash all year round, you're better off opening a fixed ISA account now with a provider that'll let you do this, such as Nationwide.

If you do want to fix, remember that if rates go up on other products you're stuck as you're locked in for the term of the deal. The only way to get out of a fix is usually to forfeit some of your interest.

Should I wait until 1 July to split my allowance?

From 1 July, ISAs turn into new ISAs (NISAs) with a £15,000 allowance, which can be all in cash if you choose. But there's no need to wait until then to open an ISA and split your cash – you can open and deposit money into an ISA today and then top it up to £15,000 from July.

See our full NISA FAQs for more information.

What about old ISAs I want to transfer?

Under existing ISA rules you can still transfer your old cash ISAs to another provider – you just can't pay in any new money.

If I can get 5% in a current account, is it worth putting money in an ISA?

While cash ISAs easily beat top normal savings, some bank accounts offer up to 5% savings as loss-leaders (see our Best Bank Accounts guide). So even after tax, they can beat the top cash ISAs.

One way to win with both deals is to fix the money you don't need access to now in a top fixed ISA. Then you can put the money you may need access to in a high-paying bank account. Towards the end of the tax year, you can then move any balance left over in your current account into the same provider's easy-access ISA.

But you need to weigh up what's more important to you – higher interest rates now, or building up cash that stays tax-free year after year.

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