New ISA rules April 2024

Expotter

HMRC has recently released more information regarding the new ISA rules to come into effect from April 6th 2024.
Notably, it includes:

1.1 Increase the age for opening cash ISAs from 16 to 18 years old and over 

From 6 April 2024 it will not be possible for anyone aged 17 and under to subscribe to more than one cash ISA. This is a mandatory change with transitional arrangements.

1.2 Allow subscriptions to multiple ISAs of the same type, except for Lifetime ISA and Junior ISA

This change is not mandatory, and managers can choose to limit subscriptions to only one ISA held with them in any tax year. 

This removes the restriction on subscribing to only one ISA of each type per year, however all subscriptions must remain within the overall ISA subscription limit of £20,000.  

The exceptions are that:

• investors with a Lifetime ISA (LISA) are still restricted to subscribing to one LISA a year
• investors with a Junior ISA (JISA) are still restricted to subscribing to one of each type in a year
• under 18s affected by the transitional arrangements set out at 1.1 are not permitted to subscribe to more than one cash ISA in a tax year

You are still responsible for making sure the overall ISA limit is not exceeded for subscriptions made with you. It’s not possible for you to know if investors are subscribing, or have subscribed, with other ISA managers, nor the amount of any such subscriptions. Individual investors remain responsible for managing their overall subscription limits.   

Where an investor holds more than one ISA with the same manager, when reporting to HMRC you must include details of each ISA separately. This includes details of multiple separate ISAs of the same type. 

1.3 Remove the requirement for an investor to make a new ISA application where an existing ISA account has received no subscription in the previous year

This change is not mandatory and, as an ISA manager, you can choose whether or not you want to request a new ISA application each subscription year or following a gap in subscriptions. Similarly, you can choose whether to require an ISA application to be completed with new terms before adopting this change, or to apply this change to your existing accounts.

1.5 Allow partial transfers of current year ISA subscriptions between ISA managers 

This change is not mandatory, and you do not have to offer or accept a transfer in (partial or full). If ISA managers choose to offer partial transfers of current year subscriptions, this should be set out in the terms and conditions of the account.   

Where current year subscriptions are transferred in full, and previous year subscriptions remain with the transferring manager, that transfer should be treated as a full transfer.

There is no change to LISA and JISA transfers, where current year subscriptions may only be transferred in full. This also applies to cash ISAs that fall within the transitional arrangements set out at 1.1, where only a full transfer of current year subscriptions would be permitted.

Full document

https://www.gov.uk/government/publications/tax-free-savings-newsletter-11/tax-free-savings-newsletter-11

Notice that most of these changes are non mandatory, so it's probably going to be more important than ever to read a lot of T&Cs concerning each individual product to determine suitability.

amanda1024

Thanks for sharing - that’s a pain about Lifetime ISAs not being included in the changes (I think I must have missed that when the changes were originally announced)

Expotter

Just a refresher of my previous post now that the new tax year is here and these rules have come into force, in the hope some might find it useful.

TheWoodler

Yes, very useful to draw attention to the non-mandatory nature of most of these changes and the importance of the Ts&Cs for both consumers and providers - particularly as most providers do not appear to have updated their key documentation in line with the changes. 

This makes it unclear whether they have not updated in line with legislation, or have not chosen to offer that option, in which case the ISA declarations that you have not subscribed to another Cash ISA in the current tax year, could turn out to be binding. 

I think providers should make clear to depositors on which side of the camp they fall and how it will affect the customer in each case. As far as my research has gone, Skipton has clarified the new rules and is open to you putting money in other Cash ISA providers. Leeds acknowledges the new rules, but reading the product terms it’s clear they expect other forms of ISA to comprise the year’s subscription, not other Cash ISAs. NatWest seems to acknowledge the new rules, but explicitly says that you won’t be able to pay into another Cash ISA if you open one with them. In each case, you know where you stand with respect to the new rules. 

There is currently insufficient clarity about whether providers have opted in or out or even have acknowledged the existence of the new rules in this market IMHO, and I suspect this has potential to come back to bite both savers and financial institutions on the bum. 

I may very well be wrong, but I’m risk-averse enough not to commit to more than one ISA at the moment. 

badger09

TheWoodler said:

Yes, very useful to draw attention to the non-mandatory nature of most of these changes and the importance of the Ts&Cs for both consumers and providers - particularly as most providers do not appear to have updated their key documentation in line with the changes. 

This makes it unclear whether they have not updated in line with legislation, or have not chosen to offer that option, in which case the ISA declarations that you have not subscribed to another Cash ISA in the current tax year, could turn out to be binding. 

I think providers should make clear to depositors on which side of the camp they fall and how it will affect the customer in each case. As far as my research has gone, Skipton and Leeds have clarified the new rules and are open to you putting money in other Cash ISA providers. NatWest seems to acknowledge the new rules, but explicitly says that you won’t be able to pay into another Cash ISA if you open one with them. You know where you stand in each case. 

There is currently insufficient clarity about whether providers have opted in or out or even have acknowledged the existence of the new rules in this market IMHO, and I suspect this has potential to come back to bite both savers and financial institutions on the bum. 

I may very well be wrong, but I’m risk-averse enough not to commit to more than one ISA at the moment. 

I think you have misunderstood. 

There is no opting in or out in terms of customers being able to open ISAs with multiple providers. That is the HMRC rule. Providers can however limit you to subscribing to only one ISA with them. 

I’ve just checked NatWest & they very clearly say ‘You can open & fund more than one of the same kind of ISA in the same tax year with different providers, but only one with us per tax year’

Digital_Payback

TheWoodler said:

Yes, very useful to draw attention to the non-mandatory nature of most of these changes and the importance of the Ts&Cs ………NatWest seems to acknowledge the new rules, but explicitly says that you won’t be able to pay into another Cash ISA if you open one with them. 

NatWest may be able to stop you opening a second Cash ISA with them, i.e. you can only have say 1 Easy Access Cash ISA or 1 Fixed Rate Cash ISA, but not both. 

But surely, NatWest, or any other ISA provider, cannot stop you having another Cash ISA with a different provider.
That’s what the new rules permit but of course savers are responsible for ensuring that all subscribed 24/25 ISAs do not exceed £20,000. 

That’s my understanding. 

masonic

TheWoodler said:

This makes it unclear whether they have not updated in line with legislation, or have not chosen to offer that option, in which case the ISA declarations that you have not subscribed to another Cash ISA in the current tax year, could turn out to be binding.

No, what happens when a contract term attempts to override your statutory rights is that the term is automatically considered unfair under the Consumer Rights Act and is rendered null and void. ISA managers should really take swift action to remove anything from their financial promotions that suggest you are not allowed to subscribe to another cash ISA elsewhere as these statements now breach FCA regulations.

gravel_2

Yes, banks can decide if they are willing to accommodate multiple ISAs with them (and presumably other parts of their group). This is just product eligibility criteria.

If someone decides to open an ISA somewhere else NatWest will not know and cannot prohibit that. It remains the obligation of the tax payer to keep their total subscription below the allowance.

TheWoodler

With respect, I have not misunderstood. As per expotter’s post above the new rules are non-mandatory changes. Which is why the whole thing requires clarification. Customers have that right, but when you look to exercise that right, providers are also exercising their own rights. That doesn’t appear to be in favour of the consumer. 

NatWest is saying ‘other providers’ - ‘but not us’. That is in line with what they also say, under ‘Paying into more than one ISA’: 

‘You won’t be able to make further payments into any other Cash ISA during the current tax year’ with the exception of the NatWest Help to Buy ISA.

gravel_2

TheWoodler said:

With respect, I have not misunderstood. As per expotter’s post above the new rules are non-mandatory changes. Which is why the whole thing requires clarification. Customers have that right, but when you look to exercise that right, providers are also exercising their own rights. That doesn’t appear to be in favour of the consumer. 

NatWest is saying ‘other providers’ - ‘but not us’. That is in line with what they also say, under ‘Paying into more than one ISA’: 

‘You won’t be able to make further payments into any other Cash ISA during the current tax year’ with the exception of the NatWest Help to Buy ISA.

You should read OP/the Gov note more carefully.

"managers can choose to limit subscriptions to only one ISA held with them in any tax year. ".

This only applies within their realm. They cannot and will not prevent customers opening another ISA with another provider. Just as in previous tax years they could not do that.

Also where are you seeing the Natwest terms? I have found a page saying this:
"You can't subscribe to more than one Cash ISA with us each tax year, or subscribe more than your annual ISA subscription in a Cash ISA, stocks and shares ISA, or any other type of ISAs in the same tax year."
This is in line with the Gov guidance and majority interpretation here.

Further:

"Can I have multiple Cash ISAs?

You can only subscribe to one Cash ISA with us in any tax year, up to your allowance of £20,000."

Digital_Payback

TheWoodler said:

NatWest is saying ‘other providers’ - ‘but not us’. That is in line with what they also say, under ‘Paying into more than one ISA’: 

‘You won’t be able to make further payments into any other Cash ISA during the current tax year’ with the exception of the NatWest Help to Buy ISA.

Maybe it’s just that NatWest haven’t update their ISA information. 

That quote seems to relate to last year’s ISA rules.