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Long freeze on individual savings accounts

Hidden away in the October Budget announcements was the freezing of individual savings accounts (ISA) annual subscription limits until 5 April 2030.

18 Dec 2024

It was announced in the October 2024 Budget that ISA annual subscription limits will be frozen until 5 April 2023. The good news that there is no intention to remove this valuable tax-free savings option, but the bad news is that over time there will be fiscal drag.

The main £20,000 ISA allowance has been in place since 6 April 2017 and will remain unchanged for a further five tax years.

Other subscription limits

The following annual subscription limits are also going to be frozen until 5 April 2030:

	Subscription limit
Lifetime ISAs	£4,000
Junior ISAs	£9,000
Child trust funds (CTFs)	£9,000

The subscription limit of £20,000 applies across the four main adult ISAs each tax year – the cash ISA, the stocks and shares ISA, the innovative finance ISA and the Lifetime ISA. Although the Lifetime ISA has a £4,000 subscription limit, this is still part of the overall £20,000 allowance.

There were concerns that the Chancellor was going to impose an overall limit on the amount of ISA saving, but the mooted lifetime cap of £500,000 did not materialise. There are currently over 4,000 ISA savers with ISA pots worth more than £1 million.

There were plans to introduce a UK ISA (or British ISA) with an additional £5,000 allowance, but the Chancellor has announced this idea will not proceed.

Fractional interests

Despite previously saying the complete opposite, HMRC have confirmed that fractional interests – commonly known as fractional shares – can be held within a stocks or shares ISA or a CTF invested in shares:

The shares of some US tech companies – such as Apple and Microsoft – can cost £100s. The availability of fractional interests will help regular savers acquire such shares.
The change will not come in immediately, but, subject to complying with the new regulations, existing fractional interests may be retained.

ISA managers will be required to remove any currently held fractional interests that are not eligible under the new regulations. HMRC’s basic guide to ISAs can be found here.