What's so great about ISA flexibility?
What is ISA flexibility and how could it benefit you and your savings?
It’s hard to believe a quarter of a century has passed since the Individual Savings Account (ISA) hit the market. With more than 13 million people planning to open an ISA in 2024, we look back at some of the key milestones since their inception 25 years ago.
1999
Individual Savings Accounts are launched by Chancellor of the Exchequer, Gordon Brown, replacing the Personal Equity Plan (PEP). The aim? Encourage saving and investing in the UK, with an annual tax-free allowance of £7,000.
2007
ISA rules were simplified, and a distinction was made between Cash ISAs and Stocks and Shares ISAs. Customers can now choose to split their savings between one type of each ISA.
2011
A junior version of the ISA is launched for the first time for children under the age of 18, replacing The Child Trust Fund. Today, the limit for the Junior ISA (JISA) is £9,000.
2016
ISA flexibility is announced, allowing savers to withdraw money from an ISA and pay it back into the same one without affecting their annual allowance. ISA flexibility wasn’t compulsory, so some providers still only offer non-flexible ISAs.
2017
The ISA subscription limit is raised from just over £15,000 to £20,000, staying at this level since. The Lifetime ISA (LISA) is also launched, allowing people to save up to £4,000 a year to buy their first home or for retirement.
What about the future?
With Jeremy Hunt announcing a raft of compulsory (which providers must make) and optional (which providers can choose to make) changes to ISAs earlier this year, the accounts are set for the biggest shake-up in quite some time. Some key changes include:
-
Age limits – the minimum age to open and manage an adult Cash ISA will be raised to 18, bringing it in line with the lower age limit for other types of ISAs. Savers under 18 can continue to make use of tax-free savings via a Junior ISA (JISA). The annual allowance for a JISA is currently £9,000.
-
No re-application needed – this one is great news for people with ISAs they haven’t paid into in some time. Savers will no longer need to fill in a form to use an ISA account if it has sat dormant (you haven’t paid anything in or taken anything out) for one year or more.
Many things have changed in the last 25 years – the iPhone shook up the tech world forever, Britain left the EU, and scientists discovered water on Mars. Despite a raft of changes to ISAs (and the world at large) since 1999, one thing hasn't changed – ISAs remain the only savings account to offer a zero-tax guarantee to savers on any interest they earn.
Want to talk to us about ISAs?
You can find out more about our ISAs for adults and children here. To talk to one of our savings advisers about the right account for you, book an appointment here. Appointments take place online, over the phone, or in person to suit you.
