Autumn Statement could be brilliant opportunity for Isa rules shake-up – experts
Reports suggest that Chancellor Jeremy Hunt is preparing an Isa shake-up which could make it easier for savers to take advantage of improved rates.
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Your support makes all the difference.The Autumn Statement could provide a “brilliant opportunity” to tweak Isa rules, creating a “major win” for savers, according to finance experts.
Reports suggest that the Government is considering allowing savers and investors to open multiple Isas of the same type in a single tax year.
Current rules already allow people to open multiple Isa accounts in a tax year, but they need to be different types of Isa – for example, a saver may open a stocks and shares and a cash Isa in the same tax year.
But experts said the potential opportunity to open multiple Isas of the same type could make it easier for savers to benefit from improved rates and grab a good deal when they see it.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The Autumn Statement is a brilliant opportunity to make vital changes to Isas.
The ability to start saving into another cash product mid-way through the tax year would be a major win for people in this situation and could also incentivise providers to improve rates
“It’s already a cornerstone of people’s savings and investment, but this is a chance to make it shine.”
Savings rates have jumped as the Bank of England base rate has increased, with many providers making significant improvements.
Isas have the advantage of being ring-fenced from the taxman for as long as they remain in their Isa “wrapper”, and savers can put away up to £20,000 per year.
Dean Butler, managing director for retail direct at Standard Life, part of Phoenix Group, said: “Savers who subscribed to a fixed-rate cash Isa earlier this year will have watched as the rates available on the market climbed higher and higher.
“The ability to start saving into another cash product mid-way through the tax year would be a major win for people in this situation and could also incentivise providers to improve rates.
“There are also likely to be some customers who want to mix fixed-rate deals and easy access savings to give them greater flexibility with their savings, and this type of proposal could help them.
The rule preventing Isa savers subscribing to more than one version of each type of Isa never made much sense. Ditching this rule removes one of the key blockers to more fundamental reform and would be an extremely welcome step in the right direction
“The case for taking out multiple investment Isas within a tax year is less obvious given many providers offer access to a wide range of different investments within the Isa wrapper already, but in those cases where customers want to access a specific investment that’s not available to them or a specific product feature, it could be a useful addition.”
AJ Bell’s head of retirement policy, Tom Selby said: “The rule preventing Isa savers subscribing to more than one version of each type of Isa never made much sense. Ditching this rule removes one of the key blockers to more fundamental reform and would be an extremely welcome step in the right direction.”
The Daily Telegraph reported that Chancellor Jeremy Hunt is preparing to make it easier for savers to move their money with a shake-up to allow people to open multiple cash Isas.
It said sources close to the discussions said that ministers are wary of implementing too many changes to the Isa regime before the next tax year starts in April.
The Autumn Statement will be delivered on November 22.
A Treasury spokesperson said that the Government department “is receptive to ideas of how we can make Isas more attractive to encourage people to develop a savings habit and to invest in a way that works for them.”