The Individual Savings Account (Amendment) Regulations 2024 were laid before the House of Commons by HMRC on behalf of HM Treasury, bringing into effect changes announced at Autumn Statement 20231. The instrument amends the Individual Savings Account Regulations 1998 to "bring into effect Autumn Statement announcements, reflect developments in other legislation, clarify the position in cases of doubt and provide additional safeguards for investors"1.
At Autumn Statement 2023 it was announced that a number of changes would be made to simplify the ISA regime for investors and ISA managers and extend choice, "including removing restrictions on the number of ISAs which can be opened and the inclusion, within an Innovative Finance ISA, of otherwise eligible but limited liquidity funds"1. The regulations amend Regulations 2D, 2G, 4, 4ZA, 4A, 4B, 5DZ, 5DZA, 5DDB, 10, 12 and 21 to permit an individual to subscribe to more than one ISA of the same type in a tax year, remove the restriction on partial transfers of subscriptions made in the current tax year, and remove the requirement for an ISA manager to provide information where they have transferred an account to themselves1. The requirement to make a fresh application where an existing account has not received subscriptions for over a year is also removed1.
On the Innovative Finance ISA, the instrument amends Regulations 4, 5DDA, 8A and 31 so that certain investments which would otherwise qualify for a stocks and shares ISA if it were not for their limited liquidity can qualify for an Innovative Finance ISA1. Investments in an Innovative Finance ISA can be an Article 36H ("peer to peer") arrangement between a borrower and lender, or a debenture issued by a company or charity ("crowdfunding")1.
Account opening for an ISA will be harmonised at 18 years, with a transitional exception so that an investor under 18 with an existing cash ISA can continue to enjoy the benefits of the account, and investors aged 16 or 17 as at 6 April 2024 will still be able to open and subscribe to a cash ISA1.
Other changes include removing the provision that allowed authorised European institutions without a UK base to operate via a UK based tax representative, following the Spring Budget 2023 announcement that ISA manager eligibility would generally be restricted to UK based managers1. HMRC will also be able to withdraw ISA manager approval if a manager has not offered an account within 18 months of being approved1.
For Lifetime ISAs, a first-time residential purchase will not be a qualifying withdrawal if the purchase is funded by a loan from a person connected to the account investor1. The instrument also removes a number of transitional provisions relating to the introduction of the Lifetime ISA in 2017, which are now obsolete1.
"At Autumn Statement 2023 it was announced that a number of changes would be made to simplify the ISA regime for investors and ISA managers and extend choice, including removing restrictions on the number of ISAs which can be opened and the inclusion, within an Innovative Finance ISA, of otherwise eligible but limited liquidity funds."
| Change | Detail |
|---|---|
| Multiple ISAs | More than one ISA of the same type permitted in a tax year1 |
| Partial transfers | Restriction on partial transfers of current year subscriptions removed1 |
| Innovative Finance ISA | Certain limited liquidity investments can qualify1 |
| Account opening age | Harmonised at 18, with transitional protection for existing under-18 cash ISAs1 |
| ISA managers | UK presence required; approval can be withdrawn after 18 months without offering an account1 |
| Lifetime ISA | Connected-party loans excluded from qualifying first-time purchases1 |
Why it matters for households
The rule that an individual may only subscribe to a single ISA of a particular type in any year is removed, so the restriction on opening more than one ISA of the same type in a tax year no longer applies1. The requirement that current year subscriptions be transferred in whole is also removed, which affects transfers between ISA managers1. The changes to the Innovative Finance ISA widen the investments that can be held in that wrapper1. The Lifetime ISA change means a first-time residential purchase funded by a loan from a connected person will not be a qualifying withdrawal, so the withdrawal charge position differs from an unconnected mortgage1. The explanatory memorandum states there is no, or no significant, impact on business, charities or voluntary bodies, and that the legislation does not impact small or micro businesses1.
What happens next
HMRC's Guidance Notes for ISA managers will be amended to reflect the changes to the ISA rules1. A Tax Information and Impact Note covering the instrument will be published on gov.uk1. HMRC will continue to review compliance with the ISA Regulations using information provided annually and through regular contact with ISA managers and other groups1. The instrument does not include a statutory review clause1.
Sources1 cited
- The Individual Savings Account (Amendment) Regulations 2024 legislation.gov.uk
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