From April next year, savers will be allowed to have multiple subscriptions of the same type of ISA, but the £20,000 limit will remain the same.
Also from April 2024, the account opening age will be harmonised for any adult ISAs to 18 – it’s currently 16 for cash ISAs.
The Government will also allow partial transfers between providers during the year, providing greater flexibility.
Adam Thrower, head of savings at Shawbrook Bank said: “The Chancellor’s announcement to allow people to save into more than one Cash ISA a year should be welcomed. It will enable savers to truly benefit from the higher rates on offer. Currently, although savers can ask a provider to transfer old ISA deposits while keeping the tax-free status, it can feel like another barrier. Allowing them to take advantage of higher ISA rates across more than one option gives them the potential to make more from their money.”
Eligible ISA investments
Rule changes also mean certain fractional shares contracts will be eligible ISA investments.
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Simon Harrington, head of public affairs at the Personal Investment Management & Financial Advice Association (PIMFA) said: “This could provide millions of mass market savers and investors to access high-performing – albeit often expensive – shares in well-known companies as part of their portfolio.
“It is right that this area has been looked at by Government and clarified for firms wishing to engage in offering fractional shares to consumers. We consider this to be an extremely positive move and look forward to consulting with the government on how this reform can be implemented.”
Long-Term Asset Funds (LTAFs) and open-ended property funds with extended notice periods will also become permitted investments in the Innovative Finance ISA.
However, annual limits for ISAs were kept the same at £20,000 for cash and stocks & shares ISAs, £9,000 for a junior ISA and £4,000 for the Lifetime ISA.
‘Opportunity to jump on more competitive deals’
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Savers and investors will be delighted the Chancellor has taken the opportunity to pay some much-needed attention to ISAs to help ensure this much-loved part of the furniture remains a firm fixture for the future.
“Allowing multiple ISAs of the same kind in a single tax year from April, and partial transfers of ISAs opened in the current year are both sensible ways to inject much-needed flexibility and simplicity into the system. For cash ISA savers, it offers the opportunity to jump on more competitive deals, if they become available later in the tax year.
“For those using stocks and shares ISAs, it protects investors who accidentally open more than one ISA of the same type in a tax year. If you make a single regular payment into a stocks and shares ISA at the start of the tax year, and then try to invest in another stocks and shares ISA on the last day of the tax year, you’ll break the rules. The second ISA provider may end up refunding your money and you could miss a big chunk of your allowance for that year. This change would remove that risk.”
Technical changes
There were also a number of smaller technical changes which will ease some of the frustrations of the system, including the fact that from April, people will no longer need to reapply for an existing dormant ISA.
Also the digitalisation of the reporting system should allow for real-time reporting. It will help HMRC to track subscriptions more easily and open the door to allowing people to hold multiple ISAs of the same kind. It will also make it essential for people to keep their details up to date with HMRC to avoid any delays to applications.
