Potential Isa reforms would remove barriers British savers, AJ Bell has said in response to reports changes are on the cards.
According to claims in the Telegraph the chancellor Jeremy Hunt plans to announce a consultation on relaxing Isa rules.
It could mean that as early as April 2024 savers would be able to pay into multiple Isas in the same year and move money without losing the tax-free allowance.
Under current rules you can open multiple accounts in a tax year but they need to be different types of Isa.
The news has been welcomed by AJ Bell’s head of retirement policy, Tom Selby, who said the company has been calling for simplification of the Isa landscape.
Seby said: “It is ridiculous investors are currently faced with a choice of six types of Isa when deciding where to invest for the future, with different rules and allowances further clouding the picture.
“Our research suggests this unnecessary complexity acts as a barrier to people saving and investing for the future, hampering their own financial prospects and those of the companies they might otherwise invest in.
“If the government brings forward this review it could be a huge step toward a radical simplification of Isas. 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.”
In March AJ Bell carried out a survey of 2,000 UK adults, finding that while more than 70 per cent of Brits are familiar with Isas, less than half could correctly identify the main types of investment Isa and less than a third know the annual Isa allowance is £20,000.
Sarah Coles, head of personal finance, Hargreaves Lansdown said the reports “offer hope” but she was disappointed it appeared Hunt had decided not to revisit the Lifetime Isa penalty.
If you withdraw money from the account for any other reason than buying your first property or before the age of 60 a 25 per cent penalty fee is applied to the amount withdrawn.
Coles added: “The Autumn Statement is a brilliant opportunity to make vital changes to Isas. It’s already a cornerstone of people’s savings and investment, but this is a chance to make it shine.
“If these reports are correct, Jeremy Hunt may already have kicked some excellent proposals into the dirt, but he seems to have embraced others, and a consultation offers hope.”
tara.o'connor@ft.com
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