In this blog post we have summarised the changes coming to ISAs (Individual Savings Accounts) in the 2024/25 tax year which started on 6th April 2024.
ISA allowances
The allowances remain the same for the 2024/25 tax year. This means that you can invest up to £20,000 across all ISA types with the Junior ISA limit being frozen at £9,000 and the Lifetime ISA limit being frozen at £4,000.
Paying into ISAs from multiple providers
As of 6th April 2024, you are able to make multiple subscriptions to the same type of ISA, with multiple providers in one tax year (subject to remaining within the maximum tax-free allowance of £20,000). For example, you may choose to invest £15,000 into a Stocks and Shares ISA using a balanced approach with one provider and £5,000 into a Stocks and Shares ISA with another provider using an adventurous approach, within the same tax year.
Further to this, from 6th April 2024, you are able to move a partial amount of money from one ISA provider to another. This means that if you had £8,000 in a Cash ISA with one provider, you could move £3,000 to another provider.
Tax allowance changes
For the 2024/25 tax year, both the dividend allowance and capital gains tax (CGT) allowance are being reduced to half of the allowance for the 2023/24 tax year. This means that the dividend allowance is £500 and the CGT allowance is £3,000. The CGT cut is particularly significant to those high earners who can easily use up their annual ISA allowance.
Launch of a new 'British ISA'
As part of his Spring Budget on 6th March 2024, Chancellor of the Exchequer, Jeremy Hunt, also announced plans to launch a British ISA. This new ISA is being introduced to encourage people to invest in British businesses. The ISA would come with an additional £5,000 tax-free limit on top of the existing £20,000 ISA allowance. The £5,000 would only relate to the British ISA though so if you do not open a British ISA, your allowance would remain at £20,000 for the tax year.
Other changes
In the 2023/24 tax year, 16 and 17-year-olds could access an adult cash ISA allowance of £20,000 in addition to their Junior Stocks & Shares ISA allowance of £9,000. However, from the start of the 2024/25 tax year, this is no longer the case and 16 and 17-year-olds only have access to the junior £9,000 allowance for both Stocks & Shares and Cash ISAs.
*Equity investments do not afford the same capital security as deposit accounts. Investments carry risk. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
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