Savers will be able to secure more competitive tax-free interest rates throughout the tax year under new plans to change ISA rules by the Chancellor, according to reports.
Currently, it’s only possible to open and put money into one of each type of ISA each tax year.
For example, an individual can open and pay into a Cash ISA and Stocks and Shares ISA in the same tax year, provided it’s within the £20,000 annual allowance, but can’t contribute to more than one Cash ISA in that year.
However, ahead of the Autumn Statement, Treasury ministers are looking at plans which would allow savers to open multiple ISAs of the same type in the same tax year, without losing their ISA allowance, The Telegraph reports.
ISAs are becoming increasingly important for savers amid rising interest rates and frozen tax thresholds
It would mean savers could easily move their money into higher-paying ISAs during the tax year.
Additionally, it’s hoped that the move would encourage providers to offer more competitive rates, as well as allow savers to make hundreds of pounds more in tax-free interest each year.
ISAs are becoming increasingly important for savers after increasing interest rates and frozen tax thresholds.
While it is possible to ask a provider to transfer ISA savings to another ISA without losing the tax-free status, this can be considered time-consuming.
AJ Bell head of retirement policy, Tom Selby: “The rule preventing ISA savers subscribing to more than one version of each type of ISA never made much sense.
“Ditching this rule removes one of the key blockers to more fundamental reform and would be an extremely welcome step in the right direction.”
Mr Selby said if the government brought forward this review, it could be a “huge step” toward a “radical” simplification of ISAs.
He said: “It provides a real opportunity to develop long-term proposals centred around stripping away unnecessary complexity and creating a single, simple ‘One ISA’ product that incorporates the best features of the existing landscape.