How ISA rules are changing in 2024-25

Individual Savings Accounts (ISAs) are one of the most popular ways to save and invest, and tax-efficient might we add!

So, it’s important to share how the rules around ISAs are changing for the 2024-25 tax year, as ‘Which?’ described it as “the biggest shake-up to tax-free savings in 15 years”.

That means there’s a lot to unpack, which is why Terry has broken down everything you need to know…

Single ISA limit removed

Previous rules meant you could only put your money into one ISA of a specific type (e.g. Cash or Stocks and Shares) in a single tax year.

However, the new system now means you can split your allowances across multiple accounts.

This provides more flexibility, meaning you can tailor your strategy to your needs and priorities, also allowing you to shop around for the best rates.

Simplified ISA management

Instead of having to open a new ISA if yours had laid dormant and unused the entirety of a tax year, they will now remain open even if you haven’t contributed for a while, saving you the time and effort of re-opening an account.

Minimum age raised

16 – 18-year-olds will now be able to open an adult ISA, meaning it’s now in line with stocks and shares ISAs.

If you’re 16 or 17, you will still be able to open a junior ISA, however, only receive a tax free allowance of £9,000, compared to the £20,000 you receive with an adult ISA.

What does this mean for you?

Overall, these are some positive changes that give you a wider range of choice over what you do with your money and allow you to optimise your strategy.

However, this doesn’t mean these rules will stay this way forever, so you’ll need to keep your eye on any changes that could impact your decisions.

The Chancellor has already stated that a new ISA product could be introduced sometime soon. Back in the March 2024 Spring Statement, Jeremy Hunt told us a consultation will be launched on a £5,000 British ISA tax allowance, which would benefit promising domestic businesses and help them expand.

Keeping up with these changes can be difficult, which is where a financial adviser can help. Not only will they keep you up to date with the latest changes, but they can offer personalized advice that suit your needs and priorities.

If you’d like to hear more about how you can utilize these new changes to ISAs, get in touch with our team here.