Around 6% of Brits keep their money in a type of savings or investment pot called an ISA (Individual Savings Account). And they’re scooping up the benefits!

ISA holders can save or invest up to £20,000 a year and won’t need to pay any capital gains or income taxes. Over the years, hanging on to these extra profits have helped make some people very wealthy. As of April 2021, 4,070 ISA holders are now millionaires!

This April, ISAs will celebrate their 25th anniversary. In the Autumn budget, Chancellor of the Exchequer, Jeremy Hunt, unveiled a series of changes designed to simplify them. Here’s a breakdown of the new rules which came into effect on 6 April 2024, and what this could mean for sustainable savers and investors.

Although this article is intended to be helpful, it is not advice. Remember that ISA and tax rules can change, any benefits you’re entitled to can depend on your individual circumstances.

1. You can open several ISAs across different providers

There are many reasons why you might want to split your ISA investments or savings across different financial service providers in the same tax year.

Perhaps you want to take advantage of lower fees. Maybe you’d like to invest in impactful projects that are not available on your current platform. Or possibly, you want to put some of your ISA allowance into savings and investments supporting the environment and society.

Previously, it was not possible to split the same type of ISA across different providers in the same tax year. Investors had to keep all their investments together in one Stocks and Shares ISA in a given tax year. Savings needed to be held together in one cash ISA too.

However, this all changed on 6 April. You can now spread your ISA investments across as many different providers as you see fit, opening the door for more personalisation.

If you’re curious about saving or investing with a sustainable ISA provider like Triodos, you will now be able to try it, without committing your entire tax years’ worth of ISA allowance. Always carefully consider your financial needs before investing and consider seeking professional advice.

2. You can move part of your current tax year’s ISA subscriptions

Over the past 25 years, all ISA investments, savings or innovative finance projects from the same tax year could not be split across multiple providers. And they couldn’t move part of their current tax year subscriptions to another provider – they had to move everything they had paid in for the tax year.

For example, let’s say you paid £20,000 into a cash ISA this tax year, but then saw an investment opportunity in a Stocks and Shares ISA with a different provider. You wouldn’t be able to move just a portion of it, you’d need to transfer the full £20,000.

For people looking to diversify their portfolios, this could be a challenge. After all, investors may want to hold on to some assets which are doing well but transfer other funds to different providers. These days, more and more people feel uncomfortable investing in fossil fuels, and may want to start slowly transitioning their wealth over to sustainable savings and investments.

With the new rules, partial transfers are possible. So, ISA holders can split existing investments or savings from the current tax year across different platforms.

This could be especially valuable for ISA savings pots that come with a Financial Services Compensation Scheme (FSCS). If a FSCS-protected bank were to collapse, account holders could get up to £85,000 of their savings back. For ISA holders who have over £85,000 stored, it could be a useful idea to split this across more than one provider to benefit from more protection.

Before moving any funds, please do your own research and consider speaking to a professional.

3. You won’t need to declare your ISA each year

Previously, you had to make a redeclaration for your ISAs if you didn’t contribute to them every tax year. But now, once you open an ISA, it stays open for life (unless, of course, you decide to close it).

Not having to go through cumbersome ISA declarations every year saves ISA holders valuable time and potential confusion. For Triodos customers, that means you can sit, back, relax and trust that we will take care of this update for you.

4. There are opportunities for Innovative Finance ISA holders

Another change which came into play relates to the Innovative Finance ISA (IFISA). With this ISA, account holders can invest up to £20,000 tax-free in peer-to-peer lending and crowdfunding ventures.

Starting this tax year, they are also able to buy “long-term asset funds”, like property and infrastructure projects. Although this isn’t going to be a widely available investment, and how many providers will offer it remains to be seen.

IFISAs are generally more risky than other types of ISAs, as they are usually unregulated and unprotected by the FSCS. They also tend to be more complex which could be why fewer people go for them. Of the 11.6 million ISAs in 2021, just 17,000 were Innovative Finance. However, they have the potential to do good.

Triodos is one of the few platforms offering sustainable IFISAs. Investors can join in crowdfunding rounds for impactful projects, like marine conservation technology or trusts to support those with learning disabilities.

So far, our investors have supported 56 organisations, with funds of over £205 million.

5. The adult ISA saving age has increased to 18 years

Another change which came into force is the age threshold for Cash ISAs. As of 6 April, it increased from 16 to 18 years, in line with other ISAs.

Under-18s can still save and invest in Junior ISAs, where the annual tax-free allowance is £9,000.

What do these changes mean for sustainable savers and investors?

While some critics think that the ISA reforms should have gone further, most people will probably welcome the new rules which make ISAs simpler and more accessible. ISA holders now have more flexibility to take advantage of the low fees, high interest rates and better opportunities elsewhere.

Importantly, it also means more people will have the chance to move their money to platforms that align with their ethics. Triodos welcomes this, as the planet urgently needs sustainable finance from all walks of life.