Huge savings shake-up confirmed in Autumn Statement - how it affects your money

23 November 2023 , 10:50

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New ISA rules were announced in the Autumn Statement (Image: Getty Images/RooM RF)

Savers will be able to pay into multiple ISAs of the same type as part of huge changes announced in the Autumn Statement.

Under the current rules, you’re only able to pay into just one ISA of each type per tax year. This means some people end up being left with a low-paying account, and no way to move to a new ISA when a better rate becomes available.

But from next April, the rules will change so that you can pay into more than one type of the same ISA account. ISAs are a special type of savings account where the interest you earn is tax-free.

You can deposit up to £20,000 each tax year, either in one type of ISA, or across different accounts. There are five types of ISA: cash ISAs, stocks & shares ISAs, Lifetime ISAs, innovative finance ISAs, and Junior ISAs.

You will also be able to do partial transfers of ISA funds, regardless of when you paid in the money, from next April. But the age of when you can open an ISA will rise from 16 to 18.

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But in less good news for savers, no plans on lifting the Lifetime Isa (LISA) limit or scrapping the penalty charge were announced in the Autumn Statement. LISAs allow you to save up to £4,000 each tax year for your first home or retirement.

In return, the Government then gives you a 25% bonus on your savings, so worth up to £1,000 each tax year. But savers who take out money from their LISA for anything other than their first home or retirement face a 25% withdrawal penalty which not only wipes out the bonus, but also part of their original savings.

You can only use your LISA savings to purchase a property worth up to £450,000, or for your retirement. MoneySavingExpert.com (MSE) founder Martin Lewis had called for the £450,000 limit to be raised to catch up with average property price growth and for the withdrawal penalty to be axed.

Martin expressed his disappointment of the absence from the Autumn Statement. He posted on X/Twitter: "Damn. Our Lifetime ISA campaign has failed. NO CHANGE to the fact people using it to buy house over £450,000 due to the house price rise, will still be FINED by the government and have less money than they started with."

Levi Winchester