Can you have a joint ISA?

If you have a partner or spouse, you’re probably used to teaming up together on all things money. You might have a joint bank account or a joint mortgage… it’s only natural that you might want a joint ISA!

However, an ISA is 1 thing that you can’t do with your partner. Sorry! Instead, an ISA can only be in 1 person’s name. Here’s everything you need to know about ISAs if you’re in a couple.

What is an ISA?

First things first, an ISA is a pretty awesome savings account designed to help you save and grow your money tax-free. Kerching!

There are a few different types of ISAs that work in slightly different ways.

1. Cash ISA. Cash ISAs are savings accounts that let you earn tax-free interest on the money you put in it (interest is a payment you’ll receive for keeping your money in the ISA, usually a small percentage).
   

2. Stocks and Shares ISA. A Stocks & Shares ISA is a great way to grow your money. The money you put in your ISA will get invested (used to buy stocks and shares, which are small stakes in companies). Then, when your investments (hopefully!) increase in value, you’ll make a profit which you won’t have to pay tax on!
   

3. Innovative finance ISA. This is a bit like a Stocks & Shares ISA, but instead of your money getting looked after by a professional, you’ll lend your money directly to companies and individuals that you choose. This is done via online platforms called ‘peer-to-peer lenders,’ like Funding Circle. It’s better suited to experienced investors as it’s higher risk.
   

4. Lifetime ISA. Also known as a LISA, this is a special type of Cash ISA or Stocks & Shares ISA that helps you save for buying your first home or to tide you over later on in life. The government adds a whopping 25% to whatever you pay in (you can pay in up to £4,000 a year). However, you can only use the money to buy your first home, if you get diagnosed with a terminal illness (hopefully not!) or once you turn 60 – otherwise you have to give back the government bonus.
   

5. Junior ISA. A junior ISA, also called a JISA, is a type of ISA designed for people under 18. If you’re a parent or guardian, you can open one up and put money into it for your child. This could be a Cash ISA or a Stocks & Shares ISA.

So, can I really not have a joint ISA?

No, you can’t have a joint ISA. Sorry! You can’t share an ISA and you can’t open up an ISA in someone else’s name either (unless you’re opening a Junior ISA for a child, of course!).

You also can’t share or transfer your ISA allowance to someone else. Let us explain.

In the UK, you’re only allowed to put a certain amount of money into your ISA each year, known as your allowance. This is how the government controls how much tax-free growth your money can make. Exactly how big the allowance is can change from year to year, but at the moment it’s £20,000 (or £9,000 for junior ISAs).

This allowance isn’t transferable, which means you can’t give it to someone else. The only exception is if you die, in which case your partner gets an extra allowance that will allow them to inherit your ISA. But hopefully, you’ll be kicking around for a long time yet!

Anyway, it’s not all doom and gloom...

How to make ISAs work for you as a couple

Not being able to have a joint ISA isn’t necessarily a bad thing if you’re in a couple. By each putting money into your own ISA, you could both make money from your savings and then, if you choose to, share the profits.

Here are the main benefits of putting your pennies to work in separate ISAs.

1. Get 2 separate allowances

This one’s pretty obvious but it’s worth saying anyway. If only 1 of you gets an ISA, that means you’ll be limited to just investing £20,000 into an ISA each year (remember that ‘allowance’ we were telling you about earlier?). 

However, if you each get your own ISA, that means you’ll have a £20,000 allowance each – £40,000 between you. The more cash you put into ISAs, the more cash your savings are likely to generate. So, by getting an ISA each, you could invest more money between you and end up with more profit to share.

Remember, you can’t technically share or combine your allowances. But if you share finances, the chances are you’ll end up sharing any cash your ISAs make!

2. Put your eggs in more than 1 basket

In the UK, each person is allowed to have multiple ISAs if they want to. However, you can only pay into 1 of each type of ISA each year.

So, if you had a Stocks & Shares ISA and a Cash ISA, you could split your yearly £20,000 allowance between them. But if you had 2 Stocks & Shares ISAs, you’d only be able to pay into 1 of them each year.

While there are lots of great things about being in a couple (dates, romance…!), arguably one of the best is that you can both pay into 1 of each type of ISA every year. So, between you, you could pay into 2 Stocks & Shares ISAs.

Now, why is that good? Well, each Stocks & Shares ISA will have different investments available. If you and your partner both pay into an ISA with a different provider, that means there’s more chance of making a return as if 1 doesn’t do so well, you’ll still have the other to rely on.

Remember, your partner’s ISA still won’t belong to you, or vice versa. But if you share finances then hopefully you’ll both benefit when either of your ISAs does particularly well!

3. Save to buy a house

If you’re hoping to buy a house with someone else, you might think it’s a shame you can’t get a joint Lifetime ISA. Remember, with a Lifetime ISA, the government will give you a bonus of 25% of any savings you put in there (you can pay in up to £4,000 per year) to help you buy your first home.

However, getting one each is much better. Why? Well, it means you can each put up to £4,000 into your ISA every year, and you can both get a 25% bonus from the government on that money.

When you’re ready to buy a home, you can then use both of your lifetime ISAs, potentially boosting your deposit by double what you could alone. Woohoo!

Can I pay into someone else’s ISA?

Okay, so the government rules are a bit confusing when they talk about whether you can pay into someone else’s ISA. They say:‍

‘Cash subscriptions from third parties can be accepted without question unless the ISA manager holds information that shows that the cash does not belong to the investor.’‍

In other words, you can pay into someone else’s ISA, but the money has to be theirs. Huh?!

Well, we don’t blame you if you’re a bit confused. The government’s advice is confusing! But most ISA providers take it to mean that you can pay into someone else’s ISA as long as the money is a gift. That means you can’t ask for it back and you don’t get to keep any returns it makes!

Exactly what you’ll need to do will vary from provider to provider, but if you’re hoping to contribute to someone else’s ISA, you’ll normally need to give some details, like your name, date of birth and address. You may also need to send in a signed letter confirming that you’re giving the money as a gift and that you’ll no longer have any claim to it.

Before you go ahead and pay into someone else’s ISA, however, it’s best to check what their ISA provider says and whether they have any specific criteria. 

Otherwise, you could just keep things simple and transfer the money to your friend or family member as a gift. They can then do what they want with it, such as paying it into their ISA themselves. Easy!

Let’s recap

As you now know, you can’t get a joint ISA as ISAs can only be in 1 person’s name. Sorry to be the bearer of bad news!

However, if you’re in a couple, all is not lost! Getting an ISA (or multiple ISAs!) each is a great shout as even though you can’t share your ISA, you can share any returns your ISAs make for you. 

If you or your partner don’t yet have an ISA, check out the best investment platforms UK to find the best one for you.