ISA account opening age harmonised at 18 with transitional protections for younger investors

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 investors¹. Its territorial application is the United Kingdom¹.

The main change is that account opening for ISAs is harmonised at 18 years¹. The age at which a cash ISA can be held rises from 16 to 18, except for individuals who were 16 or 17 years old on 5 April 2024 and who have not subsequently reached 18, who can continue to have, apply for or transfer a single cash ISA account². An investor under 18 with an existing cash ISA can continue to enjoy the benefits of the account¹. NS&I states that the minimum age for opening a cash ISA has increased from 16 to 18, and that its Direct ISA is a cash ISA for customers aged 18 or over who are resident in the UK for tax purposes⁴.

Other changes in the same instrument include permitting an individual to subscribe to more than one ISA account of the same type in a tax year, allowing the partial transfer of subscriptions made in the current tax year, and removing the requirement to make a fresh application to open an account that they already hold². The requirement for current year subscriptions to be transferred in whole is replaced by a provision that current year and previous years' subscriptions may be transferred in whole or in part². Certain investments subject to a notice period that would prevent them being held in a stocks and shares account can now qualify for an innovative finance ISA². HMRC can withdraw approval of an account manager who has not acted as such within 18 months of being approved². A first-time residential purchase will not qualify as a withdrawal from a Lifetime ISA if the purchase is funded by a loan from a person connected to the account investor². The instrument also removes a provision which allowed certain institutions based in EU member states to conduct business without being present in the United Kingdom².

Why it matters for households

Anyone who turns 16 or 17 after 5 April 2024 cannot open a cash ISA until age 18, whereas those who were already 16 or 17 on that date keep the ability to hold, apply for or transfer a single cash ISA². Existing under-18 cash ISA holders keep the benefits of their account¹. The multiple-ISA and partial-transfer changes apply across the UK from 6 April 2024¹. NS&I's Direct ISA pays 3.80% tax-free/AER variable, with a £1 minimum and a maximum of £20,000 in the 2026/27 tax year, and is not a flexible ISA, so all deposits in a tax year count towards the allowance even if money is taken out⁴. Interest on ISAs is exempt from UK Income Tax and does not count towards the Personal Savings Allowance⁴. The Lifetime ISA change means a first-time purchase funded by a loan from a connected person is not a qualifying withdrawal, so a withdrawal charge could apply¹.

What happens next

The Regulations came into force on 6 April 2024². 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.

For more detail, see the guide to ISAs, the page on whether a 16 or 17 year old can open a cash ISA, the comparison of a cash ISA and a savings account and what happens to a Junior ISA at 18.