Podcast Summary
New tax year brings ISA changes: Investors should plan their ISA investments wisely to make the most of their £20,000 annual tax-free allowance.
The 6th of April marks the beginning of the new tax year in the UK, and with it come changes to Individual Savings Accounts (ISAs). ISAs are tax-advantaged accounts for UK residents, with four main types: cash ISAs, stocks and shares ISAs, lifetime ISAs, and innovative finance ISAs. For investors, the stocks and shares ISA is most relevant, as it allows tax-free investment profits and dividends. However, it's essential to remember that you have an annual allowance of £20,000 across all your ISAs. This means you could invest £5,000 in a cash ISA and £15,000 in a stocks and shares ISA, for example, but exceeding the £20,000 limit is not allowed. The annual allowance resets every tax year. With the new tax year starting soon, it's crucial for investors to plan their ISA investments wisely to make the most of their tax-free allowance.
New ISA rules: Flexibility with multiple subscriptions: From April 6th, ISA investors can make several contributions in one tax year, providing flexibility for those with irregular income or savings patterns, while the annual limit remains unchanged.
While the Individual Savings Account (ISA) allowance resets annually, allowing you to contribute up to £20,000 each year, previous years' allowances cannot be carried forward. This means that if you're unable to max out your ISA in one year but have extra funds in the next, you may not be able to contribute the full amount you'd like. A simpler change coming to ISAs from April 6th is the minimum age requirement, which will be raised to 18 for all types of ISAs. A more significant change is the introduction of multiple subscriptions, allowing investors to make several contributions to their ISA in one tax year, as long as the total does not exceed the annual limit. This change aims to provide more flexibility for those with irregular income or savings patterns.
New Rule Allows Individuals to Contribute to Multiple ISAs of the Same Type in a Year: From April 2024, individuals in the UK can contribute to multiple cash or stocks and shares ISAs of the same type within a tax year, giving them the freedom to shop around for the best deals and avoid being locked into one provider.
Starting from April 6, 2024, individuals in the UK will no longer be restricted to contributing to just one type of ISA (Individual Savings Account) per year. This change will apply to both cash ISAs and stocks and shares ISAs. Previously, contributing to one type of ISA with a specific provider in a tax year would lock consumers into using that provider for the remainder of the year. The process of transferring ISAs between providers was time-consuming, hassle-riddled, and sometimes not even possible. For instance, if you opened a cash ISA with a bank offering a low interest rate but later found a better deal elsewhere, you couldn't contribute to a new cash ISA with the better-paying provider in the same tax year. However, this rule is now being abolished, providing consumers with the freedom to contribute to multiple ISAs of the same type within a tax year. This is a significant win for consumers as they will no longer be locked into one provider for an entire year. Trading 212, the provider we've used for our stocks and shares ISAs for the past four years, is an excellent example of a low-fee, user-friendly platform that has made investing accessible to many. We've had our stocks and shares ISAs with them since before our partnership, and their app has been a crucial tool in our investment journey.
Trading 212 introduces 1% cashback on new ISAs and free fractional shares for new customers: Trading 212 offers a 1% cashback campaign on new ISAs, plus free fractional shares for new clients, and allows partial ISA transfers starting April 6, 2024.
Starting from April 6, 2024, new Individual Savings Accounts (ISAs) opened on Trading 212 become eligible for a 1% cashback campaign, offering a 1% return on any ISO deposits made during the 2024-25 tax year. Additionally, by signing up using the code "s and s bonus" or the provided link, new customers can receive a free fractional share worth up to £100. Furthermore, partial ISA transfers will be allowed, enabling account holders to transfer any amount they choose, rather than the entire balance, from one ISA provider to another. These changes make ISAs more flexible and attractive for investors. However, it's important to note that the new UK ISA announced in the budget to encourage investments in UK stocks is not expected to launch on April 6, and its release may still be delayed.
