Changes were made to Individual Savings Accounts (ISAs) in tax year 2024 / 25. These changes are summarised below:
- The new British ISA. The British ISA will have a £5,000 allowance in addition to the current £20,000 allowance. The contributions made to this ISA will be invested in British business. You could therefore allocate up to £25,000 per year across your ISAs. The date of introduction of the ISA is unknown, but an update is expected from 6 Jun 24 onwards, after a consultation on the ISAs objectives and implementation is carried out. The plan for the British ISA has since been scrapped by the Labour government.
- You could previously spread the £20,000 allowance across each of your different types of ISA, but only pay into one of each type in the financial year (for example, you could pay £4,000 into your Lifetime ISA, £8,000 to your cash ISA and £8,000 to your stocks and shares ISA in the financial year, but if you had 2 cash ISAs, you could not pay £4,000 into each one). With the new rules, you are allowed to subscribe to multiple ISAs of the same type.
- You could previously only open one of each of the 4 types of adult ISAs per year - the new rules will allow you to open multiple ISAs of the same type.
- Prior to 6 Apr 24, if you wanted to transfer funds from an existing ISA to a new ISA, you would have to transfer all of the contributions you had made to the existing ISA in the current tax year into the the new ISA. You are now able to make partial transfers.
- The minimum age to open an adult cash ISA was 16 - this has been raised to 18. 16 and 17 year olds will still be able to open and pay into a Junior ISA.
- There is a boost to the Innovative Finance ISA. With the aim of increasing their popularity, long-term asset funds and property funds with extended notice periods will be allowed inside an Innovative Finance ISA.
- Previously, if your ISA was dormant for one tax year, you would have to reapply for the ISA - you will no longer need to do this under the new rules.
Of note, these new rules
are not mandatory - some banks and building societies may not allow you to open more than one cash ISA in the same tax year. You will be required to check with your provider to understand what new rules they are following.
