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17th
Mar 2020
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Budget Basics: What are ISA Rules for 2020/2021?

Budget Basics: What are ISA Rules for 2020/2021?

On March 11th, 2020 the annual Budget was announced for the upcoming tax year. This set out the rules for the tax year 2020/2021, including the rules for ISAs which will govern how people can use their tax-free allowance in 2020/2021.  

On March 11th, Chancellor Rishi Sunak put forward the Budget for this upcoming financial year - and with it, outlined the changes (or lack thereof) for the ISA allowances. 

What were the financial takeaways?

The headline, key points which were put forward in this Budget are:

  • The JISA will increase substantially to £9,000
  • There will be an increase in Stamp Duty for non-UK residents
  • There will be an increase in lifetime allowance for pensions
  • The threshold for National Insurance will rise
  • The existing Term Funding Scheme will be extended

Additionally, Wednesday 11th March 2020 also saw the Bank of England cut its base rate substantially to 0.25% from 0.75% in response to the financial disruption in the British economy caused by the Covid-19 outbreak throughout the world.

What does this mean for ISA savings?

For the overall ISA allowance, there is going to be no change.

This means that for the year 2020/2021, the amount of money every individual is entitled to put into ISAs will remain £20,000 per person.

This can still be spread across multiple ISAs or concentrated in one (with the exception of a Lifetime ISA, which remains at limit a £4000 per year).

For other savings accounts that are not ISAs – for those with an income of £17,500 or less, the starting 0% rate of tax on savings will remain at £5000.

What does the change in JISA limit mean?

The change in the limit of the amount savers are able to put in Junior ISA accounts for their children was the biggest change in the budget.

We’ve written a full blog outlining the ins and outs of this JISA change, but the short version is that this means parents are able to put away up to £9000 per year in an account for their children under the age of 18, which they can then access once they turn 18. 

Read more about the new Junior ISA changes.

Read more about the best Junior ISA rates.  

Junior ISAs

Junior Stocks & Shares ISA

from Fidelity

Regular Savings
  • Investment Options: Over 4,000 investment options, including funds, shares, investment trusts and exchange-traded funds

Why we like it: Fidelity’s guidance service makes it easy to find investment ideas for your child’s savings, plus Fidelity don’t charge a service fee on junior accounts meaning you keep more of your investment for your child. Ongoing fund charges and other fees may apply.

Important: The value of investments can go down as well as up so you may get back less than you invest. The value of tax savings and eligibility to invest in a Junior ISA depend on personal circumstances. All tax rules may change in future. Withdrawals from a Junior ISA will not be possible until the child reaches age 18. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

Junior Stocks and Shares ISA

from Hargreaves Lansdown

Regular Savings
  • Investment Options: Invest from £25 per month or deposits of £100.

Why we like it: Invest for your child from £25 pm tax free. A wide range of top performing funds to choose from. The annual charge for holding investments in a Hargreaves Lansdown Junior ISA is never more than 0.45%. Your dealing and other charges will depend on the investments you choose.

Important: The value of your investments can rise as well as fall. You may get back less than you invested. If you’re unsure, we recommend you ask for independent advice.

Important Risk Information:

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.

High Income ISAs

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

5 Considerations for Your Next Investment ISA

15th March 2021

You've decided to invest your savings into a Stocks and Shares ISA. You'll be using your tax-free ISA allowance for this year before the deadline, while also investing your money for your future. But what do you need to consider before opening an account? We've put together a list of our top five considerations for you to think about before you click "apply". 

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