Autumn statement - ISA rule changes from April 2024

Reed_Richards

jimjames said:

Reed_Richards said:

What does "of the same type" mean?  You have been able to split your maximum investment between Cash ISAs and Stocks and Shares ISAs for years.  So does this mean you can now have multiple Cash ISAs but only one Stocks and Shares or Multiple Stocks and Shares but only one Cash?  Or what?     

It means you can have multiple cash or S&S ISAs that you pay into during the same year. I'd initially thought it wouldn't really be much benefit but on reflection the ability to top up my iWeb ISA with a lump sum to buy shares while paying into funds in my Vanguard ISA could be quite handy.

So it means that if you have multiple ISAs of one type then you cannot have any of anther type?  

cricidmuslibale

Reed_Richards said:

jimjames said:

Reed_Richards said:

What does "of the same type" mean?  You have been able to split your maximum investment between Cash ISAs and Stocks and Shares ISAs for years.  So does this mean you can now have multiple Cash ISAs but only one Stocks and Shares or Multiple Stocks and Shares but only one Cash?  Or what?     

It means you can have multiple cash or S&S ISAs that you pay into during the same year. I'd initially thought it wouldn't really be much benefit but on reflection the ability to top up my iWeb ISA with a lump sum to buy shares while paying into funds in my Vanguard ISA could be quite handy.

So it means that if you have multiple ISAs of one type then you cannot have any of anther type?  

No, it means that from April 6 2024 (the start of the new tax year) you are, for the very first time, allowed to pay new money into any combination of multiple ISAs of all types, Cash ISAs and/or Stocks and Shares ISAs and/or Innovative Finance ISAs and/or Lifetime ISAs (if you are eligible) as long as the total amount of money you subscribe to these ISAs is no more than £20,000 during the tax year 2024-2025, i.e. up to and including April 5 2025.

refluxer

Reed_Richards said:

jimjames said:

Reed_Richards said:

What does "of the same type" mean?  You have been able to split your maximum investment between Cash ISAs and Stocks and Shares ISAs for years.  So does this mean you can now have multiple Cash ISAs but only one Stocks and Shares or Multiple Stocks and Shares but only one Cash?  Or what?     

It means you can have multiple cash or S&S ISAs that you pay into during the same year. I'd initially thought it wouldn't really be much benefit but on reflection the ability to top up my iWeb ISA with a lump sum to buy shares while paying into funds in my Vanguard ISA could be quite handy.

So it means that if you have multiple ISAs of one type then you cannot have any of anther type?  

It means you'll be able to pay new subscriptions into whatever combination of ISAs you like, rather than being restricted to only being able to pay into one of each type as you are now. 

Reed_Richards

Your explanations are what I imagined but then the words "of the same type" are superfluous.  Is there some other subtle change going on that we haven't grasped is it just really clumsy wording?  

masonic

Reed_Richards said:

Your explanations are what I imagined but then the words "of the same type" are superfluous.  Is there some other subtle change going on that we haven't grasped is it just really clumsy wording?  

I don't think the wording is clumsy. The rule they are going to drop restricts consumers from subscribing to more than one ISA of the same type per tax year. It was already possible to subscribe to multiple ISAs where those were of different types. Without those words, it would not be clear that anything was changing.

eskbanker

Reed_Richards said:

Your explanations are what I imagined but then the words "of the same type" are superfluous.  Is there some other subtle change going on that we haven't grasped is it just really clumsy wording?  

The official site currently states:

There are 4 types of ISA:

• cash ISAs
• stocks and shares ISAs
• innovative finance ISAs
• Lifetime ISAs

You can put money into one of each kind of ISA each tax year.

From April that last line will be removed - that's all there is to it!

ZeroSum

Boodedoo said:

Personal Tax and Savings 
5.38 ISA: Allowing multiple ISA subscriptions – The government will allow multiple subscriptions to ISAs of the same type every year from April 2024. 

For the hard of understanding (me!) please could someone clarify for me . . 
Does this mean that it will be possible to have both a fixed rate cash ISA  AND  an easy access cash ISA in the same tax year (as long as the combined 'new money' for that tax year does not exceed the £20k limit?

You can do that currently as long as its with the same provider & part of the same ISA bucket. Nationwide operate theirs like that.

The big difference is that next year you'll be able to open different ones at difference establishments.

ircE

Assuming I understand this correctly, and the new freedoms will apply to LISAs, what will be the point of using a LISA for retirement? Surely you'd just be subjecting yourself to more restrictions than a SIPP, so people will just use that vehicle instead. Won't LISAs now just become government subsidies for first-time home-buyers?

eskbanker

ircE said:

Assuming I understand this correctly, and the new freedoms will apply to LISAs, what will be the point of using a LISA for retirement? Surely you'd just be subjecting yourself to more restrictions than a SIPP, so people will just use that vehicle instead. Won't LISAs now just become government subsidies for first-time home-buyers?

I don't really see the new regime making a material difference to the LISA proposition - the fundamental restrictions with that product remain the same, i.e. limited contributions, withdrawal penalties, etc, and the benefits side of the equation (the 25% bonus) is also unaltered, so why/how would the April 2024 changes affect the comparison between LISAs and SIPPs?

masonic

The prior removal of the pensions lifetime allowance might have swung the pendulum a bit further in favour of pensions, but not the changes to ISAs. There are still a few use cases for LISAs in retirement. Some might even use one to buy a non-qualifying property at 60+.