Individual Savings Account ISA Reforms 2024

15/03/2024 - 6 minutes read

ISA reforms 2024 were announced by the government at Autumn statement 2023.

ISA reforms 2024 come into effect from 06th April 2024 and we have summarised the changes below.

Increase the age for opening cash ISAs from 16 to 18 years old and over

From 6 April 2024 it will not be possible for anyone aged 17 and under to subscribe to more than one cash ISA. This is a mandatory change with transitional arrangements.

Individual Savings Account ISA Reforms 2024

Individual Savings Account ISA Reforms 2024

ISA reforms 2024 Transitional arrangements

The transitional arrangements end at midnight on 5 April 2024.

If, at 5 April 2024, an individual is 16 or 17 and does not have an existing cash ISA, they will be eligible to apply for, and subscribe to, a single cash ISA in any tax year until their 18th birthday.

Where an individual aged 16 or 17 holds an existing cash ISA, they may continue to subscribe to it or transfer it to another cash ISA after 6 April 2024.

Where an individual aged 16 or 17 has a cash ISA on fixed rate or fixed terms and it ends, maturing funds may be transferred to a new cash ISA, or the existing manager may transfer funds to a new or continuing product where this is provided for in the term and conditions of the existing account.

An individual aged 16 or 17 with a cash ISA is eligible for additional permitted subscriptions to that ISA, however any current year subscriptions must be transferred in full.

ISA managers can choose whether to offer cash ISAs to individuals who fall within the transitional arrangements.

Allow subscriptions to multiple ISAs of the same type, except for Lifetime ISA and Junior ISA

This change is not mandatory, and managers can choose to limit subscriptions to only one ISA held with them in any tax year.

This removes the restriction on subscribing to only one ISA of each type per year, however all subscriptions must remain within the overall ISA subscription limit of £20,000.

The exceptions are that:

  • – investors with a Lifetime ISA (LISA) are still restricted to subscribing to one LISA a year
  • – investors with a Junior ISA (JISA) are still restricted to subscribing to one of each type in a year
  • – under 18s affected by the transitional arrangements set out at 1.1 are not permitted to subscribe to more than one cash ISA in a tax year

Where an investor holds more than one ISA with the same manager, when reporting to HMRC, they must include details of each ISA separately. This includes details of multiple separate ISAs of the same type.

Remove the requirement for an investor to make a new ISA application where an existing ISA account has received no subscription in the previous year

This change is not mandatory and, an ISA manager, can choose whether or not they want to request a new ISA application each subscription year or following a gap in subscriptions. Similarly, an ISA manager can choose whether to require an ISA application to be completed with new terms before adopting this change, or to apply this change to the existing accounts.

The model application forms in the ISA manager guidance will be updated by HMRC accordingly.

If the investor becomes non-UK resident and later returns to the UK, they should make a declaration to confirm they are again a UK resident, including their permanent UK address. It is not necessary for them to complete a full new ISA application for an existing account. However, this does not apply to Lifetime ISAs as the declaration contained within the application form has effect for each year in which the individual makes a subscription to the account.

If a breach in the ISA rules is found for an ISA opened with a continuous application, the tax year in which the breach occurred must be voided. This means that all subscriptions and any gains in that tax year must be removed. Subscriptions made in earlier and later years are unaffected unless a breach occurred in other years.

Allow Long-Term Asset Funds (LTAFs) and other funds with extended redemption periods to be permitted investments in an innovative finance ISA

This change is not mandatory, and managers can choose which qualifying investments they offer. Funds that would qualify for a stocks and shares ISA but cannot be liquidated within 30 days, are eligible to be held in an innovative finance ISA, including LTAFs.

The underlying fund will need to follow the rules set out within the stocks and shares ISA guidance, except for the liquidity rules.

To qualify for the innovative finance ISA, the fund must be able to be liquidated within 31 to 185 days of the investor’s request.

Further details can be found in Hmrc’s Newsletter 11.

How can MCL Accountants help with your queries on ISA reforms 2024?

Contact MCL Accountants on 01702 593 029 if you would like us to answer your queries on ISA reforms 2024 or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.