The Autumn Statement in 2023 included some changes to ISA rules and how they work in the 2024/25 tax year.

The big one is that from 6th April 2024, you can pay into more than one of the same ISA type (e.g. Cash ISA and Stocks & Shares ISA) in a single tax year. This gives you more flexibility over how you choose to build your wealth and earn the best savings rates.

There’s also been a change to partial transfers. From 6th April 2024 you can now transfer part of an ISA you’ve paid into in the current tax year (as well as a previous tax year). Before this, you had to transfer the full amount. A transfer could be from one ISA provider to another (if they accept these), or through features like our Move Money tool between your Moneybox ISAs.

And finally, if you haven’t contributed to your Cash ISA and/or Stocks & Shares ISA for a whole tax year, but would like to start making deposits again, you no longer need to reaffirm your ISA declaration.

 

Stocks & Shares ISA

The annual Stocks & Shares ISA allowance remains unchanged at £20,000. This is shared with any other ISAs you might have. 

One thing to be aware of for the 2024/25 tax year is that the capital gains allowance and the dividend allowance will both be cut in half to £3,000 and £500 respectively. If all of your investments are held in a Stocks & Shares ISA – this won’t affect you.

But if you have investments outside of a Stocks & Shares ISA – like in a General Investment Account – you might want to consider moving that money into a Stocks & Shares ISA to make the most of your annual ISA allowance and to avoid paying tax on your capital gains or dividends. 

This change will make a Stocks & Shares ISA even more attractive to investors in future tax years as it increases the possibility of having to pay tax on gains or dividends earned outside of a tax wrapper.

All investing should be long term (min. 5 years). The value of your investments can go up and down, and you may get back less than you invest.

 

Cash ISA

The annual Cash ISA allowance will remain unchanged at £20,000 for the 2024/25 tax year. Again, this is shared with any other ISAs you might have. 

 

Lifetime ISA

The annual Lifetime ISA allowance remains unchanged at £4,000. This is part of your £20,000 annual ISA allowance.

This means that there’s still a free £1,000 bonus from the government up for grabs each year. Remember, you get a 25% bonus from the government on everything you deposit into a Lifetime ISA during the tax year.

The rules around only being able to pay into one per tax year remains unchanged from previous tax years. The only change in the existing rules to note is that the mortgage for your first home can no longer be provided by a party related to you (e.g. spouse, parent, grandparent, sibling etc.).

 

We’ve been campaigning to future-proof the Lifetime ISA for aspiring homeowners, and are hoping to see some changes announced in the near future.

A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.

 

You can see the full ISA rule changes on the government website.