ISAs have just turned 25 years old and with that milestone comes a whole host of new developments.
The Autumn Statement 2023 already saw ISAs simplified to provide more choice for savers and easier transfers between ISAs. This was closely followed by a major development announced in the recent Spring Budget when Chancellor Jeremy Hunt outlined plans to introduce a new British ISA.
Investing in the UK economy
Informed by extensive consultation with more than 200 representatives from the City and high-growth sectors, this new ISA has been designed to support a “culture of investment” in UK companies. Its most ground-breaking feature is that it includes an additional £5000 allowance on top of the total annual ISA allowance of £20,000.
The additional £5000 must be solely invested in stocks and shares, allowing investors to support the UK’s thriving capital markets and companies with the highest growth potential. If it is introduced, it will help savers to fulfil financial goals in the long-term and support ambitious investors who are likely to exceed the current £20,000 limit and wish to access greater opportunities.
Some questions still remain, such as “What exactly defines a ‘UK investment’?”. Other key questions that need to be answered include whether there are other investments that already qualify for an ISA that should be eligible for the UK ISA.
A government consultation set to complete by early June aims to answer these questions. It will also consider other factors, such as rules around subscriptions to more than one UK ISA and whether transfers from any type of ISA to a UK ISA should be allowed. It will also look at queries around the holding of cash in the UK ISA.
The exact scope of the new ISA also needs to be solidified. Crucially, one approach – as reported by FT Adviser – could mean defining “eligible investments as ordinary shares in companies that are incorporated in the UK and are either listed on a UK recognised stock exchange or admitted to trading on a UK recognised stock exchange.” This includes the London Stock Exchange and the Alternative Investment Market.
More flexibility for ISA savers
This development all comes as part of major changes for ISA savings that were announced in 2023’s Autumn Statement and came into effect with the new tax year on 6 April. There is now no limit to the number of ISAs individuals can open; previously it was one of each type of ISA every tax year.
Secondly, savers can now make partial transfers when moving funds from one provider to another; in previous years, customers were required to transfer their entire ISA of that type from the current tax year or nothing at all.
There is also no longer the need to reapply for your ISA if the account has been dormant for one tax year. ISAs will remain open and ready for savers as and when they wish to utilise them, making the whole savings process run far more smoothly.
ISA-eligible investments
With additional flexibility and choices for savers, there has never been a more interesting time to invest using an ISA. There is currently no fixed date for when the British ISA will be launched although it is being floated for an April 2025 introduction. The government first needs to ascertain which current Isa providers would consider offering the new product, and what changes they would need to make in order to deliver it.
In the meantime, there are plenty of ISA-related current investment and savings opportunities available. Our experienced investment consultants offer access to ISA-eligible investments designed to suit high net worth investors. For more information on the opportunities available, contact Devete today.
*Provider rules may apply. Please check your terms and conditions or speak to a trusted professional before opening an ISA.
