ISA changes you’ll want to know for 2024
Since the arrival of the Individual Savings Account (ISA) in 1999, ISAs have remained one of the most tax efficient ways of saving.
That’s thanks to the ISA ‘wrapping’ your money away from income tax and capital gains tax.
The type of ISA you choose depends on what’s right for you. If you’re not sure what that might be, you can have a look at our handy article for the differences between Cash and Stocks & Shares ISAs.
In the 2023 Autumn Statement, Jeremy Hunt announced changes to the ISA rules, in an effort to simplify them. Not all of the proposed changes are guaranteed to happen, but it can give you an idea of what’s on the horizon, especially as we prepare for the end of the 2023/24 tax year in April.
Brrrrrr… ISA allowance freeze
There’s been some pressure on the government to increase ISA annual allowances, but a freeze on the annual limits for the next tax year is here instead.
The new tax year (6 April 2024- 5 April 2025) will see the overall ISA allowance remain at £20,000.
The good news is you can split your ISA allowance between all of the ISAs available on the market; a Stocks and Shares ISA, a Cash ISA, an Innovative Finance ISA and a Lifetime ISA.
Keep in mind, each different type of ISA has different rules. For example, you can only save £4,000 a year into a Lifetime ISA.
One-ISA per year limit removed
The government has made it easier to open multiple ISAs with different providers in a single tax year.
Before the 2024/25 tax year, savers were only able to open one ISA of each type per tax year. That meant that someone couldn’t open two Stocks and Shares ISAs with different providers in the same tax year.
But now you can. With the exception of the Lifetime ISA, which will remain as one per tax year. But keep in mind, your £20,000 ISA allowance must be divided between these. It’s not £20,000 per ISA, per tax year.
This won’t be available with all banks or investment platforms, so it’s best to check with your provider.
ISA re-application made simpler
If you hadn’t saved into an ISA in the previous tax year, the government required you to make a new ISA application.
But this requirement has been removed. So, some providers will allow you to add money to an untouched ISA without you needing to resubscribe. Make sure to check with your provider whether they’ve introduced this to their products, before making any changes.
Partial ISA transfers announced for the future
It might soon be possible to partially transfer any amount you choose into another ISA, regardless of when you subscribed to the original ISA. That means you can partially transfer out any money paid within the current tax year.
Previously, ISA savers were only able to fully transfer any contributions they’d made within the current tax year to another provider.
Although the change was announced in the Autumn budget, there’s no news on when this will be coming into effect. Make sure you check any fine print before making any partial or full transfers.
Cash ISA age changes to keep on your radar
Some new changes are coming down the line for anyone aged 16 and 17 who want to open a Cash ISA.
From 6 April 2024, anyone aged 16 or 17 can open a Cash ISA, but they can only hold and subscribe to one before the age of 18. Previously, it was possible to open more than one.
The rules around these changes aren’t set in stone just yet and the finer details are still being ironed out. We’re expecting more details soon, so check back in for future updates.
If the value of your investment falls, you could get back less money than you put in.
You should think of investing as a medium to long-term commitment – so be prepared to invest your money for at least five years.
We hope the information in this article is useful, but it isn't financial advice. If you want expert advice, you should speak to an Independent Financial Advisor.
Tax depends on your individual circumstances and the regulations may change in the future.