While we didn’t see full simplification of ISAs in last year’s Autumn Statement, there’s some minor changes you need to be aware of. So let's take a better look.
Allowances are frozen
The ISA allowance for adult accounts will remain at £20,000 and so will the £4,000 limit for Lifetime ISAs that sits within that overall amount. The Junior ISA allowance also stays the same at £9,000 level for the 2024/25. You can’t carry over any unused allowances from the previous tax years.
Like to split your ISA allowance? You’ll have more flexibility
From 6 April, you’ll be able to pay into multiple ISAs of the same type. Previously, you could split your ISA allowance between different types of ISA, but were restricted to only one ISA of the same type each tax year.
For example, you could set up a direct debit into a Stocks and shares ISA with one provider, and later in the year use a Bed and ISA somewhere else, to move investments from a Dealing account into another ISA there.
Cash ISA savers might want to mix and match between an easy access Cash ISA with one provider and locking in a fixed-term account with another.
It’s important to make sure that by using multiple ISAs, you don't go over your overall £20,000 allowance for the tax year.
And keep in mind that the new flexibility does not extend to Lifetime ISAs or Junior ISAs.
Skipped a year? You won’t need to reapply to pay in
In the past, you might’ve been asked to ‘reapply’ for an existing ISA if you hadn’t paid anything into it in the tax year before. That’s because ISA rules would’ve classed it as dormant. This little know rule caught investors out and often caused delays, so getting rid of it will make it much easier for you to restart payments into ISAs that are already open.
Transfers will become easier
If you wanted to transfer cash and investments bought with the current tax year's money, it would all have to be moved at once. Providers can now allow partial transfer of money if they wish to, however this is not a mandatory change.
Not all providers will offer this, so you should check with your provider to see if a partial transfer of current year subscriptions is available.
Is there more change to come?
You’ve probably heard about the new plans for a 'UK ISA', as announced in the Budget. This would be a new product, with an extra £5,000 ISA allowance on offer for investors who use it buy UK assets. At the time of writing, we are in the middle of the official consultation stage.
Last year, the Government announced earlier plans to allow certain fractional shares in ISA, but we’re still waiting for the consultation to be released. It could be good news for investors who want to buy into some of the big US brands that are currently out of reach due to their share price, but appears at odds with the plans to get extra ISA into UK stocks, which have leapfrogged into that all important consultation stage.