Several changes to Individual Savings Accounts (ISAs) were announced in this year’s Autumn Statement. Here we outline some of the key points to help you plan your financial future.
Allowing multiple ISA subscriptions
Under the new rules, from 6th April, savers and investors will now be able to open more than one of each type of ISA in any tax year, those being Cash, Stocks and shares, and Innovative finance ISAs.
For example, savers will soon be able to contribute to both an instant access and fixed-term cash ISA in the same year. For investors, this could also mean contributing to different stocks and shares ISAs, perhaps investing across different types of long-term strategies.
Allowing partial transfers between providers
The Government also announced a relaxation of rules to allow partial transfers of ISA funds in-year between providers, also from April 2024. This grants savers and investors greater flexibility to move between products in any given tax year.
Removing the requirement to reapply for an existing ISA annually
As it stands, savers and investors are currently required to reapply when wishing to contribute to an ISA that may have ‘lapsed’. In other words, you may have contributed to the product in one tax year but skipped the following year due to your own personal financial circumstances, and were then ready to contribute in the next tax year. Under new rules, restarting contributions should be made much easier.
The freezing of annual limits
Not a change as such, but the Government has confirmed it will freeze ISA (£20,000), Junior ISA (£9,000), Lifetime ISAs (£4,000) and Child Trust Fund (£9,000) limits at their current levels for the 2024-25 tax year.
The Nutmeg view
Claire Exley, head of wealth services at Nutmeg, said: “When the ISA was first introduced it was hailed as a simple option to encourage people to put money away – either through saving or investing – in a tax-efficient way. In the past 25 years with the introduction of new ISA types – the Help to Buy ISA (no longer available to open), Innovative finance ISAs etc – the ISA family and the corresponding rules have become increasingly complex.
“In a rising interest rate environment, and with the personal savings allowance at £1,000 for basic rate taxpayers, £500 for higher rate taxpayers and nothing for additional rate taxpayers, simple, tax-efficient options are vital for consumers looking to put money away for their future goals.
“The rules around which combination of ISAs you can contribute to in a single tax-year can often catch people out. Simplifying the rules, allows people to save or invest in a way that suits their personal circumstances to achieve their goals. You may have people who want to use a mix of instant access cash ISAs and fixed term cash ISAs, as well as putting some of their money to work with a managed investment portfolio and keeping a little to invest in one or two investments that appeal to them.”
Nutmeg's experts are on hand with free financial guidance if you have any questions about ISAs. Book a free call today.
As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. A stocks and shares ISA may not be right for everyone and tax rules may change in the future. If you are unsure if an ISA is the right choice for you, please seek financial advice.