With their tax-free perks, ISAs (Individual Savings Accounts) are a smart way to boost your long-term savings. And from 6 April 2024, you could enjoy them even more.
Yes, this tax year marks the biggest shake-up to ISAs in over a decade – with new rules giving you more freedom and control than ever.
The latest changes to ISAs could help you:
- Achieve better returns over time
- Feel more reassured in times of uncertainty
- Avoid any unnecessary confusion.
As great as this sounds, 78% of people don’t know about the new rules – according to research by Wesleyan.
Are you missing out?
If you’re in the dark too, it’s worth getting to grips with the latest reforms – and understanding how they could benefit you.
By not knowing, you might be missing out on opportunities to make a bigger difference to your financial future.
So, to help you, I’m here to give you a quick run-through of four new rules worth knowing about.
What are the main ISA changes from April 2024?
1. You can open as many ISAs of the same type as you like
You’ve always been able to spread your ISA allowance over different types of ISAs – such as cash ISAs and stocks and shares ISAs. But you couldn’t save into more than one ISA of the same type.
Under the new rules, you can pay into multiple versions of the same type of ISA, up to your annual ISA allowance of £20,000 in each tax year.
This change means you could:
- Take advantage of opportunities when they arise. If you have a cash ISA with one provider and spot a better offer elsewhere, you can open another ISA with a new provider - and pay into that one as well.
- Enjoy the benefits of different products all at the same time. For example, you could make use of many types of cash ISAs available - like fixed, limited access or easy access.
These rules don’t apply to Lifetime ISAs or Junior ISAs.
2. You can decide how much money you switch into another ISA
Each tax year, you’ve always been able to move your money from one ISA to another – but with certain limitations.
From 6 April – depending on what your provider allows – it’s up to you how much money you transfer from one ISA to another. So, for example if you had £15,000 in a cash ISA, you could keep £5,000 in that cash ISA and move £10,000 to a different cash ISA.
These rule changes do not apply to the Lifetime ISA or Junior ISA.
3. You don't have to reapply for an ISA you already have
Up until now, if you hadn’t paid into an existing ISA in the previous tax year, you’d have to renew or revalidate your ISA – to be able to use your ISA allowance for the new tax year.
From 6 April, you may no longer have to do this depending on your provider.
4. The minimum age is changing to open a cash ISA
From April 2024, the minimum age to open an adult cash ISA is rising from 16 to 18 years old. This mirrors the age requirement for other ISAs, like stocks and shares ISAs.
There’s a transitional arrangement that will stay in place until 5 April 2026. Depending on your provider, this means that if you’re 16 or 17 on 6 April 2024, you can still open and subscribe to one type of ISA each tax year.
Also, it’s important to remember that anyone under 18 years can still get the same tax-free benefits through a Junior ISA. But instead of the £20,000 annual allowance, you can only pay in £9,000 each tax year.
Do you know how ISAs work?
After understanding more about the new ISA rules, Wesleyan revealed almost a third of people said they were interested in taking out an ISA.
And aside from the new rules, the same research unveiled a few misconceptions people have when it comes to ISAs:
- 70% are unsure how different types of ISAs work
- Almost half feel they need large sums of money to open an ISA
- 22% don’t want their money tied up into an account.
The truth is – when saving into ISAs, you can put as little as you want in them. Plus, certain products allow you to take out your money whenever you wish.
Discover more about the benefits of an ISA on our Could an ISA boost your savings? Life & Money article.
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Now is a key time to take advantage of potentially higher interest rates on ISAs.
And the great news is – our ISA specialists are here to help you make the most of this tax-efficient allowance, to help grow your savings.
Important Information
The tax treatment of savings and investments depends on personal circumstances. Tax rules may change in the future.