Thanks, Mr Hunt: three welcome ISA changes

As an investment wrapper, ISAs have a lot to offer. But chancellors love tweaking them, making them even more attractive. Last week’s Autumn Statement was no exception.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Many of us invest through Individual Savings Accounts (ISAs). And why wouldn’t you? An income free from income tax, capital gains free from capital gains tax, and no need whatsoever to maintain complex records of trades and income to present to the taxman.

And over the years, ISA wrappers have been improved upon by various governments. The £3,000 limit has been replaced by a more useful £20,000 allowance; ISAs can now contain AIM shares, and ISAs can now be inherited by spouses and civil partners.

Not content with all this, Jeremy Hunt’s Autumn Statement last week unveiled three more useful tweaks to the ISA regime

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Improvement #1: multiple subscriptions

So from April next year, ISA savers and investors will be able to invest in multiple ISAs of the same type, each year. You can already have multiple ISAs of the same type, of course — but now you can split your £20,000 (or whatever) between multiple ISAs, of the same type, within a given tax year.

Why would you want to do this? One reason I’ve seen trotted out is that it would make it easier to move ISAs if you became dissatisfied with an ISA provider’s service.

A better reason, I think, is that it could enable investors to invest more cost-effectively, or with more choice of potential investments. Some ISA providers are better for funds, some are better for individual shares, and some are better for investment trusts. Someone wanting to split their allowance between funds and shares could easily decide that two different ISA providers made sense.

Improvement #2: partial transfers

The ability to switch ISAs between providers is useful, enabling savers and investors to reduce costs and increase choice. I’ve done it myself.

But hitherto, you’ve only been able to do it in respect of entire ISAs. No longer.

Again, from April, ISA savers and investors will be able to partially switch some of their ISA holdings to another provider. The ability to do this doesn’t make much sense in the case of cash ISAs, but for investors like you and I — with Stocks and Share ISAs — there’s a more obvious appeal.

Different ISA providers have different charging structures, and partial transfers allow ISA investors to tweak their asset allocations between ISA providers so as to optimise this, and thereby reduce charges.

You could hold funds in one ISA account, and shares in another, for instance. It’s not exactly a revolutionary advance, but I can see people taking advantage of it

Improvement #3: fractional shares

Want to buy shares in McDonald’s? BoeingTeslaAppleAmazon? Or — gulp — Warren Buffett’s Berkshire Hathaway?

Plenty of people do — and in the case of tech shares, young people especially.

The trouble is that such shares are pricey. Apple shares are $190, as I write. McDonald’s, $282. Boeing, $218. Amazon, $149.

Berkshire Hathaway? Don’t even ask. Oh, alright then, seeing as you insist: a whopping $546,025. And no, that’s not a typo — although the company does also offer the more modestly-priced Class B shares.

The situation in the UK isn’t quite as bad. But it’s not perfect: as Paul Killik, founder of brokers Killik & Co points out, plenty of UK shares are pricey, too: over a quarter of the FTSE 100, for instance, have share prices greater than £20. AstraZeneca shares, as I write, are priced at £100.08.

Quite clearly, then, someone dripping money into an ISA every month intending to buy such shares faces an obvious problem: they won’t be able to invest all of it. They’ll be able to buy some whole shares, but then be left with some ‘change’, carried forward to the next month.

To get around this, some ISA providers offer ‘fractional shares’: fractions of shares, so as to use up all of an investor’s investable cash.

The trouble is, while it’s an obvious solution, HMRC say that they don’t allow it — so most ISA providers don’t offer fractional shares. Those that do offer it, say that their readings of the rules permit it.

It is, in short, a mess. But a mess no longer: from April, all ISA providers will be able to offer fractional shares, if they want to. The details have yet to be worked out, but consultations are ongoing.

More, please!

All in all, sensible stuff. Everything an investor could ask for?

Not quite: the ISA limit has been stuck at £20,000 since the 2017-18 tax year. Inflation-adjusted, says an article in the Financial Times, the ISA limit should now be £25,760.

Ah well. There’s always the next Autumn Statement.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Malcolm owns shares in AstraZeneca. The Motley Fool UK has recommended Amazon, Apple, AstraZeneca Plc, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

UK money in a Jar on a background
Investing Articles

Here’s how a stock market beginner could start investing with £2 a day

Our writer illustrates how, even with just a couple of pounds a day to spare, a new investor could start…

Read more »

Investing Articles

£10k invested in 2025’s best-performing FTSE 100 stock one month ago is now worth…

Mobiles specialist Airtel Africa was the top FTSE 100 stock in January, after investors celebrated confidence-boosting results. So how long…

Read more »

photo of Union Jack flags bunting in local street party
Investing Articles

How much would an investor need in UK shares to earn an £833 monthly passive income?

For any investors hoping to make a passive income, UK shares might be one path towards the goal. Let’s take…

Read more »

Investing Articles

How much could a £20k Stocks and Shares ISA earn in the next decade?

If someone invested a £20k Stocks and Shares ISA now, what might they hope it to be worth in a…

Read more »

US Stock

Investing £750 in the S&P 500 a year ago would be worth this much now

Jon Smith explains why an investment in the S&P 500 last year would have beaten the FTSE 100, but cites…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Here, in 5 steps, is how Warren Buffett turned £100 into £3,787,464!

Our writer learns a handful of lessons from the masterful investing career of Warren Buffett and his phenomenal long-term performance.

Read more »

Close-up of British bank notes
Investing Articles

£800 invested this February could be earning a second income by the summer!

Buying a portfolio of dividend shares is a proven tactic for building a second income. Here's how it could be…

Read more »

artificial intelligence investing algorithms
Growth Shares

2 FTSE stocks that could do well with the DeepSeek AI breakthrough

Jon Smith talks through the implications of the latest AI news and flags up some FTSE shares that could benefit…

Read more »