Interactive Investor

Autumn Statement 2023: the ISA rule changes, and the tweaks not made

Various ISA proposals were discussed ahead of the Autumn Statement, and a couple of changes were announced in the small print following Jeremy Hunt’s speech.

22nd November 2023 14:43

Kyle Caldwell from interactive investor

As usual, in the weeks running up to Chancellor Jeremy Hunt stepping up to the despatch box, there was plenty of speculation over what would be announced.

For investors, one of the rumours doing the rounds was potential reform to simplify individual savings accounts, or ISAs.

There were various proposals, and a couple of them made it into the small print following Hunt’s speech.

The main change is that the government will allow multiple subscriptions to ISAs of the same type every year from April 2024. Under the current rules, you can only open one type of ISA each tax year: cash, stocks and shares, or innovative finance. There’s also the Help to Buy ISA, but this is no longer available for new subscribers.

To smooth the process of having multiple ISAs, the government announced that it will allow partial transfers of ISA funds in-year between providers from April 2024.

The government said that it is “making changes to simplify ISAs and provide more choice, meaning it will be easier for people to choose the best ISA accounts for their needs and move money between them”.  

Another ISA rule change will allow Long-Term Asset Funds (LTAFs) to be permitted investments in the Innovative Finance ISA. LTAFs, a new type of fund structure that has been recently introduced, invest in illiquid assets including real estate and infrastructure, venture capital, private equity and private debt.

LTAFs differ from open-ended funds in having notice periods of at least 90 days. The notice periods aim to potentially address shortcomings with illiquid assets in open-ended funds, which are daily dealing. As investors have seen time and time again, during periods of stress open-ended property funds have put suspensions in place, due to the illiquid nature of that asset class.

Other ISA announcements in today’s Autumn Statement are the digitalisation of the ISA reporting system to enable the development of digital tools to support investors, the inclusion of certain fractional shares, the removal of the requirement to reapply for an existing ISA annually, and tweaking the account opening age for any adult ISA to 18.

Investors hoping for an increased ISA allowance were disappointed. The £20,000 a year limit, which has remained at that level since April 2017, will be frozen for the 2024-25 tax year. The Junior ISA allowance will also remain at its current level of £9,000.

A new British ISA also did not materialise. It had been suggested that the ISA allowance would go up from £20,000 to £25,000, with the extra £5,000 reserved solely to invest in UK equity funds and individual UK-listed shares. Fund management firm Premier Miton has lobbied the government for a new British ISA.  

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