Important ISA rule change offers savers more flexibility with their savings | Personal Finance | Finance newsbhunt

The rules on Individual Savings Accounts (ISAs) will be changed to allow savers to pay into multiple ISAs of the same type in one year and to facilitate transfers between providers.

The government is also giving the green light for “certain fractional shares” to be held in ISA.

This will be a welcome move for young investors and for the platforms offering fractional shares, which are currently locked in a dispute with HMRC on this very subject.

From April 2024, people will be able to subscribe to multiple ISAs of the same type every year and to partially transfer ISA funds between different providers.

This should make it easier for savers to switch providers if they are unsatisfied with their service.

Stephen Sillars, savings and investment editor at wealth app Chip, said: “For savers, ISA reform was a diamond hidden in the rough of the Autumn Statement’s accompanying 120-page document.

“Important changes were announced that will take effect from April 2024. Amongst other things, savers will now be able to contribute money to more than one of the same type ISA in the same tax year – something that wasn’t allowed before.

“They’ll also now be able to make partial transfers of ISA savings they’ve made within a tax year between different providers, which is another plus.”

These changes will give people much more flexibility in how they use their ISA allowance, which in turn should help more people to use it to their maximum advantage.

Ms Sillars explained that any option where savers can enjoy a simple, rewarding and tax-free experience for their money is a win, especially as interest rates remain high and many people may unknowingly surpass their personal savings allowance in the near future.

It’s important those looking to build their wealth consider the tax advantages of ISAs, to make sure they keep more of their interest and “avoid a tax bill down the line”.

The ISA allowance will now remain the same at £20,000 a year.

Jason Hollands, managing director at Bestinvest, said this is disappointing because the allowance has been frozen since the 2017/18 tax year.

He said: “To restore the real value of the allowance to where it was then, it would need to increase to at least £25,760 to adjust for the effect of inflation.”

James Needham, Chief Product Officer at Wesleyan, the financial services mutual explained that effectively increasing the annual ISA allowance would be another welcome step, making the ISA market more competitive and enabling more people to earn tax-free interest.

He added: “We’d urge savers to take the time to review what might change and what it could mean for your financial plans.”

#Important #ISA #rule #change #offers #savers #flexibility #savings #Personal #Finance #Finance

You May Also Like

More From Author

+ There are no comments

Add yours