ISAs are changing next tax year – what you need to know (2024)

ISAs first launched in 1999. They're a great option to make investing as tax-efficient as possible. Once money is paid into an ISA, it’s then sheltered from both UK income and capital gains tax.

Over the years, we’ve seen different types of ISAs launched and tweaks to ISA rules and regulations.

Next tax year (or later this week) ISA rules are changing again. Here’s what you need to know.

This article isn’t personal advice. As we’ve seen, ISA and tax rules can change, and any benefits depend on your circ*mstances. If you’re not sure what’s right for you, ask for financial advice.

What ISA changes are coming next tax year?

OK, not a change, but the overall ISA allowance is staying at £20,000 per tax year.

You can currently split your allowance between a Stocks and Shares ISA, a Cash ISA, an Innovative Finance ISA and a Lifetime ISA (up to £4,000 per tax year which counts towards the overall £20,000 limit).

The Junior ISA allowance will also stay at £9,000.

This will make it easier to have ISAs of the same type in different places in the same tax year. It could offer Cash ISA savers the chance to go after more competitive rates more easily, or pick and mix easy access and fixed rates.

It also helps protect those who accidentally pay into more than one of the same type of ISA in a single tax year. This is easy to do when you pay into an ISA by Direct Debit. The change removes that risk of breaking the rules.

This rule change doesn’t apply to the Lifetime ISA or Junior ISA.

You can still only subscribe to one Lifetime ISA a year. And you can only open one type of each Junior ISA (Cash and Stocks and Shares) for a child.

In a similar way, this will give ISA savers and investors greater flexibility and control (from April 2024). The rules currently force an all-or-nothing approach to current year ISA transfers – you have to transfer your entire ISA of that type from the current tax year, or nothing at all.

The change means you’ll have control of how much you want to transfer, no matter when you made the subscription.

ISA savers and investors are currently required to, in essence, reapply for ISAs they already hold when there’s been a gap of one tax year where no subscriptions were paid. Removing this rule should reduce the potential for confusion and cut down on unnecessary red tape.

This rule only directly impacts Cash ISAs, where the minimum age for opening an account is currently 16 years old. The 18+ rule will mirror other adult ISAs from April 2024. 16 and 17-year olds will continue to be able to open and save into a Junior ISA.

More changes for ISAs coming?

In the Spring Budget, Chancellor Jeremy Hunt announced the government was starting a consultation into a new ‘British ISA’.

This ISA would give investors an additional £5,000 ISA allowance to invest in UK shares.

To make sure you don’t miss out, sign up for alerts and stay up to date on the latest British ISA news.

We'll let you know:

• If the British ISA is going ahead

• Details on how the British ISA would work

• How to invest once launched if it goes ahead

• You’ll also get helpful insights and information from our experts.

Don’t wait to use your ISA allowance

While some of these changes are welcome, they don’t change the ISA’s biggest appeal – not having to pay UK income and capital gains tax. So, there’s no need to wait.

You have until 11:59pm on 5 April to use this year’s ISA allowance.

Our most popular account is the long-standing Stocks and Shares ISA. You can choose from ready-made options, or create your own ISA portfolio by picking from funds, shares and more.

The longer you invest, the less likely you are to lose money, but there are no guarantees. Unlike the security offered by cash, investments fall as well as rise in value, so you could get back less than you put in.

For shorter-term goals, less than five years away or rainy-day savings, the HL Cash ISA also puts you in charge. In a single tax year, you can spread your ISA allowance across easy-access, limited-access and fixed-term products (when available) offered by our banking partners and not pay tax on interest.

The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.

Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).