What will happen to your ISA as ‘easier, flexible’ rules come into force?

New rules mean savers are now able to split their ISAs across multiple banks after the government confirmed it will allow multiple subscriptions to ISAs of the same type during the same year.

Ahead of the changes coming into force in April, Anaam Raza of investment platform Saxo, said it will be ‘easier’ for people to find the best deals.

Currently, Brits can only open one ISA each year, but everyone will be able to split their savings across different providers and options. There are five types of ISA: Cash ISAs, Stocks and Shares, Lifetime, Innovative Finance and Junior.

The new changes also mean you will be able to make partial transfers of ISA funds in the same year between providers, and anyone opening a new ISA will have to be aged 18 or over. These changes are designed to make it easier for investors to try out different ISAs and benefit as new deals become available.

Despite the changes, the ISA allowance continues to be frozen at £20,000, as has been the case since 2017, meaning investors can save this as a maximum each year in ISAs. Anaam said the “added flexibility” from the rule changes will allow investors to tailor their accounts to their specific needs.

Anaam Raza of investment platform Saxo, said, “The new ISA changes will make it easier for people to shop around for the best deals. Currently, you can only subscribe once to each type of ISA each year. Going forward savers will be able to hold multiple subscriptions of the same ISA type. This means if you have an ISA and find a better deal, you are now able to have a subscription with the new provider in addition to the existing one you have.

“You are still limited to £20,000 over all the subscriptions, but this added flexibility allows you to tailor your ISA to your specific needs. Adding to the flexibility to the allowance of partial transfers, so if you find that better deal, you don’t have to transfer everything from your old ISA to the new one, you can transfer as much or as little as you like.

“Generally ISAs are one of the most tax-efficient ways of investing. Outside of an ISA, you only get £1000 tax-free allowance, so any dividend income above £1000 is taxed. If you hold these securities in an ISA then all dividends received are tax free. Furthermore, once in an ISA your investments are exempt from capital gain tax protecting any profit.”