All change on your ISA
New rules allow for more flexibility - but there's a catch, says Paul Lewis.
Tax-free Individual Savings Accounts – Isas – were supposed to become more flexible this year. In his March budget, Chancellor of the Exchequer Jeremy Hunt announced several simplifications of what can seem pernickety rules about opening Isas and moving money between them. But the relaxations are not compulsory and many providers have not yet implemented them.
MULTIPLE ISAs
From this year there are no rules to stop you opening more than one Isa of the same type. (Previously you could only open one cash and one shares Isa.) Now you can, for example, open a variable rate cash Isa and a fixed rate cash Isa in the same year. Similarly, if you have Isas from previous years, you can pay money into all of them if you want (in the past you could pay only into one of them). The overall limit of £20,000 for the total amount put into Isas in a tax year has not been changed.
However, not all Isa providers New Money supplement Find out about the inheritance tax rules, how to save money on car insurance and more radiotimes.com/moneymay2024 will allow these new freedoms, and if you open an Isa, you may still have to promise not to open another this tax year. So before you do start an Isa or pay into an existing one, make sure you know what rules your provider operates.
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PARTIAL MOVING
If you want to move money from one Isa to another, the law now allows you to move just some of it. (Until this year, you had to move it all.) Again, though, most Isa providers still do not allow partial transfers, and it’s not clear when, or indeed if, all providers will allow these new freedoms – which require updates to their systems.
JUNIOR ISAs
One new rule change is compulsory for providers. The age at which an adult Isa can be opened has been raised from 16 to 18 years old. Any 16- or 17-year-olds who already have an adult Isa can keep it, but no new ones can be opened by people under 18 – instead they must open a Junior Isa. That’s bad news for those young people who want a cash Isa, as the best buy Junior Isas are all paying lower rates of interest than best buy adult Isas.