ISAs have been a hot topic ahead of chancellor Jeremy Hunt’s Autumn Statement next week. Ideas have been mooted including a UK shares ISA designed to encourage investment into domestic companies, as well as the cleaning up of the options currently available.
At present, savers can open one cash, stocks & shares, lifetime and innovative finance ISA per year, providing the total added does not exceed the £20,000 limit.
According to reports, the latest is that changes will be made to allow savers to put cash into multiple ISAs of the same type throughout the year – something that is currently not possible – to stimulate a more competitive savings landscape. Currently savers are allowed to open or save into one of each type of vehicle each year, as long as the total saved does not exceed the ISA limit.
AJ Bell head of retirement policy Tom Selby has been calling for a simplified ISA regime. Describing the current landscape as “ridiculous”, he said he hoped the government would go further in the future.
“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,” he said.
Selby called for a “radical simplification”, which would ultimately result in just one option that incorporates all elements and allows savers to move their cash around freely.
“Coupled with reforms designed to boost the financial help available to millions of Brits, this could create the foundations of an investing revolution in the UK,” he argued.
Experts do not expect the ISA allowance to increase; it will remain at £20,000 and £9,000 for junior ISAs.
There had been talk of a UK shares-only ISA, which would give an additional £5,000 allowance through the new product. The proposal was put forward by Premier Miton and fund manager Gervais Williams told Trustnet it would have a “substantial” impact on UK shares.
This appears to have been ditched, however, although it was a largely unpopular proposal among personal finance experts. At the time, Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The last thing we need is another ISA to complicate and disrupt a range that is working extremely well for investors.”
For my money the chancellor should consider AJ Bell’s one ISA proposal. I wrote several weeks ago about how cash ISAs looked more compelling than ever. Had I been able to easily move some of my stocks & shares ISA money over, I absolutely would have done.
As it happens, I couldn’t be bothered with the faff of setting up a new product. Is this lazy? Yes. Am I alone in this? Probably not.
But it is not just lethargy. Keeping track of how much money you have saved into different ISAs can be confusing – particularly if you use different providers: something most savers should be doing if looking for the best cash rates.
In a world where saving is harder than ever thanks to the cost-of-living crisis, savers should have more freedom to do what they wish with their money. The government should be helping to make this happen. While the current proposals are a good start, we needs much further reform.