Autumn statement - ISA rule changes from April 2024

Albermarle

eskbanker said:

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?

Also no tax to be paid on withdrawal from a LISA once you are 60.
As you say I do not see the recently announced changes to ISA's affecting the pros and cons of LISA vs pension. 
@ircE
Pros and cons explained later in this link.
Lifetime ISA (LISA): how they work & best buys (moneysavingexpert.com)

eskbanker

Albermarle said:
Also no tax to be paid on withdrawal from a LISA once you are 60.

To be pedantic, there's never any tax to be paid on withdrawal from any ISA at any time!

But yes, no withdrawal penalties after 60....

surreysaver

I wonder how this would work with flexible ISAs. I've currently got £20k sitting in a flexible cash ISA that I've put in this year, as well as subscribing to a S&S ISA. As long as I take out of my cash ISA an equivalent amount that I've paid into my S&S ISA before the end of the tax year, this is acceptable.
What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

jimjames

surreysaver said:

What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

Good question. I think the whole thing could be completely unmanageable and might get reversed quite soon afterwards. Like you say, as long as you have the correct balance at the end of the year which is reported to HMRC then a higher amount is allowed during that year which could be in multiple accounts. 

masonic

Let's wait until we get there. It is possible there will be changes to reporting that go hand in hand with these increased freedoms - although I wouldn't be surprised if this aspect is not addressed.

refluxer

surreysaver said:

I wonder how this would work with flexible ISAs. I've currently got £20k sitting in a flexible cash ISA that I've put in this year, as well as subscribing to a S&S ISA. As long as I take out of my cash ISA an equivalent amount that I've paid into my S&S ISA before the end of the tax year, this is acceptable.
What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

I'm wondering if I've misunderstood ? Anyone who pays more than £20k of new subscriptions in total into any combination of ISAs of any type in the same tax year will have broken the £20k ISA limit rule and therefore made a false statement on any cash ISA declarations, regardless of the state of play at the end of the tax year or whether that's now or during the next tax year (after the rule changes).

"I declare that I have not subscribed/made a payment to and will not subscribe/make a payment more than the overall subscription limit in total to any combination of permitted ISA types in the same tax year"

eskbanker

refluxer said:

surreysaver said:

I wonder how this would work with flexible ISAs. I've currently got £20k sitting in a flexible cash ISA that I've put in this year, as well as subscribing to a S&S ISA. As long as I take out of my cash ISA an equivalent amount that I've paid into my S&S ISA before the end of the tax year, this is acceptable.
What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

I'm wondering if I've misunderstood ? Anyone who pays more than £20k of new subscriptions in total into any combination of ISAs of any type in the same tax year will have broken the £20k ISA limit rule and therefore made a false statement on any cash ISA declarations, regardless of the state of play at the end of the tax year or whether that's now or during the next tax year (after the rule changes).

"I declare that I have not subscribed/made a payment to and will not subscribe/make a payment more than the overall subscription limit in total to any combination of permitted ISA types in the same tax year"

This echoes a discussion on here from a year ago:

https://forums.moneysavingexpert.com/discussion/6407177/flexible-cash-isa-and-s-s-isa-rules/p1

surreysaver

refluxer said:

surreysaver said:

I wonder how this would work with flexible ISAs. I've currently got £20k sitting in a flexible cash ISA that I've put in this year, as well as subscribing to a S&S ISA. As long as I take out of my cash ISA an equivalent amount that I've paid into my S&S ISA before the end of the tax year, this is acceptable.
What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

I'm wondering if I've misunderstood ? Anyone who pays more than £20k of new subscriptions in total into any combination of ISAs of any type in the same tax year will have broken the £20k ISA limit rule and therefore made a false statement on any cash ISA declarations, regardless of the state of play at the end of the tax year or whether that's now or during the next tax year (after the rule changes).

"I declare that I have not subscribed/made a payment to and will not subscribe/make a payment more than the overall subscription limit in total to any combination of permitted ISA types in the same tax year"

You have misunderstood. Here's the thread started by myself earlier this year
https://forums.moneysavingexpert.com/discussion/6438967/flexible-cash-isa-plus-stocks-shares-isa

This article on MSE is wrong, as you cannot have a flexible S&S ISA

https://www.moneysavingexpert.com/savings/flexible-isas/

Here is the HMRC page
https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#flexible-isas

masonic

surreysaver said:

refluxer said:

surreysaver said:

I wonder how this would work with flexible ISAs. I've currently got £20k sitting in a flexible cash ISA that I've put in this year, as well as subscribing to a S&S ISA. As long as I take out of my cash ISA an equivalent amount that I've paid into my S&S ISA before the end of the tax year, this is acceptable.
What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

I'm wondering if I've misunderstood ? Anyone who pays more than £20k of new subscriptions in total into any combination of ISAs of any type in the same tax year will have broken the £20k ISA limit rule and therefore made a false statement on any cash ISA declarations, regardless of the state of play at the end of the tax year or whether that's now or during the next tax year (after the rule changes).

"I declare that I have not subscribed/made a payment to and will not subscribe/make a payment more than the overall subscription limit in total to any combination of permitted ISA types in the same tax year"

You have misunderstood. Here's the thread started by myself earlier this year
https://forums.moneysavingexpert.com/discussion/6438967/flexible-cash-isa-plus-stocks-shares-isa

This article on MSE is wrong, as you cannot have a flexible S&S ISA

https://www.moneysavingexpert.com/savings/flexible-isas/

Here is the HMRC page
https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#flexible-isas

I'm not sure what it is exactly that you think @refluxer has misunderstood. It is certainly the case, as was discussed in your other thread, that to be compliant with the ISA declaration, you must not at any time exceed the overall subscription limit within a single tax year.

I'm also not sure what specifically within the MSE article you think is wrong. You can have a flexible S&S ISA, and in fact two major providers offer them (Vanguard and Charles Stanley Direct). There are probably others who escape me at this time.

The HMRC text that you have screenshotted refers to Lifetime ISAs, not S&S ISAs. LISAs (either cash or S&S variants) cannot be flexible due to the additional restrictions placed upon them related to earning a bonus on contributions.

surreysaver

masonic said:

surreysaver said:

refluxer said:

surreysaver said:

I wonder how this would work with flexible ISAs. I've currently got £20k sitting in a flexible cash ISA that I've put in this year, as well as subscribing to a S&S ISA. As long as I take out of my cash ISA an equivalent amount that I've paid into my S&S ISA before the end of the tax year, this is acceptable.
What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

I'm wondering if I've misunderstood ? Anyone who pays more than £20k of new subscriptions in total into any combination of ISAs of any type in the same tax year will have broken the £20k ISA limit rule and therefore made a false statement on any cash ISA declarations, regardless of the state of play at the end of the tax year or whether that's now or during the next tax year (after the rule changes).

"I declare that I have not subscribed/made a payment to and will not subscribe/make a payment more than the overall subscription limit in total to any combination of permitted ISA types in the same tax year"

You have misunderstood. Here's the thread started by myself earlier this year
https://forums.moneysavingexpert.com/discussion/6438967/flexible-cash-isa-plus-stocks-shares-isa

This article on MSE is wrong, as you cannot have a flexible S&S ISA

https://www.moneysavingexpert.com/savings/flexible-isas/

Here is the HMRC page
https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#flexible-isas

I'm not sure what it is exactly that you think @refluxer has misunderstood. It is certainly the case, as was discussed in your other thread, that to be compliant with the ISA declaration, you must not at any time exceed the overall subscription limit within a single tax year.

I'm also not sure what specifically within the MSE article you think is wrong. You can have a flexible S&S ISA, and in fact two major providers offer them (Vanguard and Charles Stanley Direct). There are probably others who escape me at this time.

The HMRC text that you have screenshotted refers to Lifetime ISAs, not S&S ISAs. LISAs (either cash or S&S variants) cannot be flexible due to the additional restrictions placed upon them related to earning a bonus on contributions.

ISA declaration and HMRC rules appear to be two different things.
With a  S&S ISA, only cash held within it can be flexible, as in my link