New ISA rules April 2024

TheWoodler

I consider the wording ‘not for you . . . if you want to save with someone else’ worthy of complaint in its own right, not only in terms of the new regulations, but because it doesn’t even say ‘save into an ISA with another provider’.

This wording could reasonably be read and interpreted by a customer that they don’t want you to save any type of product full stop with another provider . . . 

auser99

masonic said:

Reed_Richards said:

You have a statutory right to open another ISA elsewhere but do Shawbrook have a right to close your ISA account (by insisting that you move it elsewhere) if they managed to find out that you had breached their terms and conditions?    

Let us assume it was fair for providers to take such a stance. Why wouldn't banks say of any account "you can only hold this account if your only account of this type is with us". In the case of a current account or credit card, they could find out about others you hold and enforce it. The answer is that it would be considered an unfair, anti-competitive practice. The Financial Ombudsman Service (and FCA) would have a field day protecting customers from such treatment. I'd suggest anyone who's received a communication to this effect about a cash ISA makes a formal complaint.

Once I've managed to get the money back out of Shawbrook and get an ISA sorted elsewhere, I think i'll do just this.

jameslester78

As someone who works in IT and know how things work and how slow they can change, I would expect that many banks systems are set up using old rules and wont allow you to hold more than one isa and until they priortise this change it'll stay that way despite the rule change.

masonic

jameslester78 said:

As someone who works in IT and know how things work and how slow they can change, I would expect that many banks systems are set up using old rules and wont allow you to hold more than one isa and until they priortise this change it'll stay that way despite the rule change.

But there is no excuse for any ISA manager telling customers they are not permitted to subscribe to a cash ISA elsewhere if they subscribe to a cash ISA with the ISA manager in question.

Rich2808

Carl13 said:

Have just called Paragon regarding another matter and thought I would mention the new rules as I see they offer the option to spread your yearly allowance over more than one Cash ISA. However, the operator told me they do "not allow" you to spread your allowance over multiple banks. Therefore you are a captured customer with them for the tax year if you only use part of your allowance now. How these rules are being applied are actually reducing freedom of options for customers and will probably result in various banks losing / not gaining customers or having money pulled from accounts as well as increasing the number of rule "breaks" depending on the wording on declarations and how each establishment is applying the rules (who will enforce these; the banks, HMRC who struggle to operate a phone line now and from personal experience can not confirm the most basic tax advice correctly?).

How can they 'not allow you to spread your ISA allowance over multiple banks?'

It is none of their business - as you are legally allowed to do it under government legislation/regulations. How would they know anyway if you paid £5k into an ISA with them and £5k into an ISA with another provider.

Having dealt with this provider - and others - I am often amazed how poorly trained many staff are dealing with ISAs who don't understand the rules.  This can easily cause serious mistakes to be made - as has happened to me in terms of my 2023-24 ISA contributions.

Don't ever assume what call centre staff in ISA teams are telling you is correct! It could cost you money and issues with HMRC down the road.

Malchester

I have thought all along that the reason banks are not allowing subscriptions to more than one ISA with themselves is down to computer systems not being geared up for it rather than having an objection to it in principle. 

As for saying you cannot subscribe to another ISA elsewhere, that is ludicrous. What is the difference between subscribing to 2 1 year fixes with different institutions in the same year? 

Malchester

Just spoken to. Paragon. You can fund more than 1 ISA with them in a year but not with them and another bank. I asked how they were going to police this and the agent said they couldn't. I asked what was the point in having their ISA declaration if it couldn't be policed she couldn't answer. She said she was just answering my question with her script

I guess that when HMRC receive information at the end of the financial year and more than one ISA has been subscribed they will do nothing as no rules have been broken 

Rich2808

Malchester said:

Just spoken to. Paragon. You can fund more than 1 ISA with them in a year but not with them and another bank. I asked how they were going to police this and the agent said they couldn't. I asked what was the point in having their ISA declaration if it couldn't be policed she couldn't answer. She said she was just answering my question with her script

I guess that when HMRC receive information at the end of the financial year and more than one ISA has been subscribed they will do nothing as no rules have been broken 

It is obviously a great way to 'encourage' you to invest all your cash ISA money with Paragon I suppose. Oh you have paid £1 to us - so you can only pay the remaining £19,999 allowance to them too?

Paragon are a split ISA provider - so like Nationwide, Aldermore, Ford, Kent Reliance, Post Office savings and a few others have allowed you to pay into multiple cash isas in the same tax year for a number of years - so that is not new for them.

https://www.thisismoney.co.uk/money/saving/article-6903495/What-portfolio-Isa-tax-wrapper-allows-savers-open-multiple-cash-accounts.html

The only people who will know what ISAs you have invested in are you - and eventually HRMC - when it is reported post tax year end. Each bank/society will know what new funds you have invested with them - but not with other institutions. Paragon cannot police or enforce this at all in terms of funds invested elsewhere - and sorry their 'script' does not override laws/regulations approved by parliament and ministers.

You are legally entitled to open more than one ISA with new funds in 2024-25 (one with Paragon and one with a dozen other providers if you wish up to your £20k total allowance) - and Paragon cannot stop you doing so. Cos Parliament overrides Paragon!

So I would just encourage you to ignore their script - and invest your £20,000 as you wish within the rules. One bank can have a say about what/how you invest with them - and possibly within their banking group - but they cannot determine what you invest with other institutions if you are acting within the law!

Malchester

Rich808 said:

Malchester said:

Just spoken to. Paragon. You can fund more than 1 ISA with them in a year but not with them and another bank. I asked how they were going to police this and the agent said they couldn't. I asked what was the point in having their ISA declaration if it couldn't be policed she couldn't answer. She said she was just answering my question with her script

I guess that when HMRC receive information at the end of the financial year and more than one ISA has been subscribed they will do nothing as no rules have been broken 

It is obviously a great way to 'encourage' you to invest all your cash ISA money with Paragon I suppose. Oh you have paid £1 to us - so you can only pay the remaining £19,999 allowance to them too?

The only people who will know what ISAs you have invested in are you - and eventually HRMC - when it is reported post tax year end. Each bank/society will know what new funds you have invested with them - but not with other institutions. Paragon cannot police or enforce this at all in terms of funds invested elsewhere - and sorry their 'script' does not override laws/regulations approved by parliament and ministers.

You are legally entitled to open more than one ISA with new funds in 2024-25 (one with Paragon and one with a dozen other providers if you wish up to your £20k total allowance) - and Paragon cannot stop you doing so. Cos Parliament overrides Paragon!

So I would just encourage you to ignore their script - and invest your £20,000 as you wish within the rules. One bank can have a say about what/how you invest with them - and possibly within their banking group - but they cannot determine what you invest with other institutions if you are acting within the law!

Exactly. Well said. How they can argue any other way beggars belief 

jimjames

Rich2808 said:

Malchester said:

Just spoken to. Paragon. You can fund more than 1 ISA with them in a year but not with them and another bank. I asked how they were going to police this and the agent said they couldn't. I asked what was the point in having their ISA declaration if it couldn't be policed she couldn't answer. She said she was just answering my question with her script

I guess that when HMRC receive information at the end of the financial year and more than one ISA has been subscribed they will do nothing as no rules have been broken 

So I would just encourage you to ignore their script - and invest your £20,000 as you wish within the rules. One bank can have a say about what/how you invest with them - and possibly within their banking group - but they cannot determine what you invest with other institutions if you are acting within the law!

I can see some real problems at the end of this year and beyond. When a provider includes the wording about how much ISA allowance is left and you can have ISAs with multiple providers then for those less savvy on the rules it would appear that you can have £20k in the ISA in each bank. I know it's been possible to do that for years with cash & S&S ISAs but the vast majority of people only use cash ISAs so it's been a minimal issue until now.