ISAs are a key part of our team’s financial toolkit, owing to the £20,000 annual allowance with tax-free gains and withdrawals. There were actually some changes made this year regarding ISAs, and Cyra’s summarised them below for you.
- Minimum age to open a cash ISA is now 18yrs from 16yrs. This now means all types of adult ISAs are subject to the minimum age of 18yrs. If you’re ages 16 or 17 but have an adult ISA because of the previous rules, you’re not affected by the new rules outlined below.
- This is a big one, you can now pay into more than one of the same kind of ISA in the same tax year. Just to clarify what that means, if you have 2 cash ISAs opened in different tax years, you can now pay into both of them in the same tax year but the overall ISA deposit limit across all ISAs is still £20,000.
- Previously if you had an ISA which you didn’t pay into in the tax year, you needed to make a declaration prior to paying into it in the new tax year. You now don’t need to do this.
- You can now do partial ISA transfers from one provider to another regardless of when you made any deposits. You can still only have one Cash Lifetime ISA and one Stocks and Share Lifetime ISA though.
- Under 18s and their parents can still pay into a junior ISA.
- Here’s another big one! You can now open multiple ISAs of the same type (excluding Lifetime ISAs) in the same tax year, whereas, you were only able to open one previously. You might want to do this if you wanted to take advantage of different types (e.g. fixed deposit, long-term etc) or if you find a better deal elsewhere.
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So this hasn’t come in yet but in the Spring Budget, it was mentioned that a new type of ISA may be introduced called the UK ISA, which would give you an additional £5,000 allowance over the existing £20,000 allowance. This ISA is used to invest specifically in UK businesses and may carry some risk. There is a consultation open currently that closed on the 6th of June.
It wouldn’t be a Cyra blog if I didn’t throw a bit of my opinion in here. Isn’t it annoying how inflation has been rising, cost of living is going up, wages are increasing (albeit slowly), but the amount you can save tax free has remained stagnant for years? This is called fiscal drag, where Government policies drag more people into paying more tax. Very annoying indeed.
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