As the current tax year ushers in new rules allowing more flexibility in Cash Individual Savings Accounts (ISAs), savers find themselves navigating a landscape fraught with inconsistencies. The government's updated rules permit individuals to open multiple ISAs of the same kind and make partial transfers of funds saved or invested within the year. However, only 36 out of 98 Cash ISA providers have embraced these changes, leaving savers frustrated and puzzled.
The Cash ISA, a popular savings vehicle, enables individuals to save money tax-free up to a certain annual limit. This tax year marks the first time savers can open more than one Cash ISA. Despite this increased flexibility, the majority of banks and building societies have not adapted their policies accordingly. Almost two-thirds of Cash ISA providers still do not allow customers to open a second account within the same tax year.
Banks and building societies, by and large, reject partial transfers of money invested this year. As a result, savers wishing to switch providers often must transfer their entire balance. OakNorth Bank stands out as an exception, permitting customers to deposit funds even if they already hold one of its Cash ISAs. Nationwide Building Society also offers notable flexibility, allowing partial transfers.
"This means [a saver] could put some in, say, a fixed-rate Isa and leave some in an easy access Isa, or have two fixed-rate Isas with different terms, etc." – Nationwide building society spokesperson
Conversely, many other providers have maintained restrictive practices. Coventry Building Society explicitly forbids customers from making current tax year subscriptions to another Cash ISA within the same year.
"You must not have paid in current tax year subscriptions to another cash Isa with us in the same tax year." – Coventry building society
Furthermore, some institutions require outdated procedures despite regulatory changes. For instance, Yorkshire Building Society still mandates that savers complete an ISA declaration form before funds can be added.
"You'll need to complete an Isa declaration form. We can't add money to your account until we've received this." – Yorkshire building society
The government website clarifies that savers can transfer all or part of their ISA savings from one provider to another at any time, whether the investments were made this year or in previous years.
"You can transfer all or part of the savings in your individual savings account (Isa) from one provider to another at any time … The investment can have been made this year or in previous years." – Government website
Despite this guidance, many financial institutions remain reluctant to adopt these flexibilities. The Treasury has acknowledged that it is up to individual ISA providers to decide whether they will implement these changes.
"It is a commercial decision for individual Isa providers whether they take advantage of increased flexibility in the Isa system, and customers should compare the terms offered by providers to find a product that suits their needs." – Treasury spokesperson
Anna Bowes, a savings expert at The Private Office, noted that most providers are willing to accept new customers who already hold an ISA with another institution. However, they are less inclined to allow these customers to open additional accounts within the same provider.
"what I found was that most providers would let you open an Isa with them if you had one with someone else, but most would not let you open a new one with them" – Anna Bowes, a savings expert at the financial advisory firm The Private Office
Providers like Kent Reliance, M&S Bank, and Skipton Building Society do allow partial transfers, offering some relief to savers seeking flexibility. Meanwhile, major institutions like Santander have indicated potential future reviews of their policies regarding multiple ISAs.
The Treasury reportedly continues discussions about the future of Cash ISAs as regulatory changes evolve. Since April 2024, tax authorities have permitted any combination of ISA types without requiring a declaration before moving funds into previous years' accounts. However, several providers have not adhered to this updated practice.