As the new tax year begins, today (April 6) that means that changes will come into place for Individual Savings Accounts (ISAs). The difference between an ISA and other savings accounts is that any interest that you earn is tax-free on your savings.
However, the catch is that you can only deposit up to £20,000 each tax year, with some accounts having a smaller limit. For example, a Lifetime ISA allows you to save £4,000 each tax year or £9,000 in a junior ISA for your children.
BirminghamLive reported that money saved into a Junior ISA does not affect your own £20,000 allowance. Current rules allow you to into one ISA of each type per tax year but from today (April 6) you will be able to pay into multiple ISA’s.
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Personal Finance Analyst at Bestinvest by Evelyn Partners, Alice Haine, said: “This will be useful for investors who want to use more than one provider or have different ISAs for different financial goals.”
You will also be able to do partial transfers of ISA funds no matter when you paid the money in, but you still won’t be able to pay in more than your annual ISA allowance. Previous rules were that the entire funds must be transferred.
Anaam Raze of investment platform Saxo added: “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.”
Currently, you can open a Cash ISA when you turn 16, but this will now be from 18. If you decide to open a savings account, make sure to research for the best rates.
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