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By Wesleyan

78% of UK adults still in the dark over ISA overhaul

financial planning
3 min
Young female sitting on sofa holding mug and phone

Most UK adults are unaware of a major shake-up of ISA rules coming in April 2024. These changes could make it easier to get better deals and create more 'balanced' investment portfolios, according to new research commissioned by Wesleyan.

Persistent ISA 'myths' are causing confusion - 70% say that they don’t understand how different ISA types work and 45% of those without ISAs think large sums of money are needed to have one.

A raft of ISA rule changes designed to simplify the scheme and encourage more people to invest tax free were announced by the Chancellor in his Autumn Statement in November 2023. This includes allowing investors to open multiple ISAs of the same type every tax year.

The reforms are designed to incentivise ISA use by giving savers more flexibility with their money – enabling them to create ISA portfolios better suited to their needs, and make seeking better returns easier.

New research conducted on behalf of Wesleyan found that 78% of 2,000 UK adults surveyed didn’t know about the rule change to allow multiple ISAs of the same type to be opened within the same tax year. Although, when told about the imminent shake up, almost a third (31%) said the changes would make them want to invest more money into ISAs.

The survey also uncovered enduring misconceptions around ISAs that could mean savers are missing out on the potential benefits.

Seven in ten (70%) of the UK adults surveyed didn’t know how the different types of ISAs available work.

Of those who don’t hold ISAs, close to half (45%) believe you need large sums of money to open an ISA and more than one in five (22%) say they don’t want to lock their money away where they can’t access it.

In reality, you can typically open an ISA online, with low minimum subscriptions, and there are options available that allow you to withdraw your money at any time.

Toby Hester, Deputy Chief Product Officer at Wesleyan, said: "The changes to ISA rules announced in the Autumn Statement are a welcome step towards providing more flexibility for investors, but could have gone further.

"Being able to open more than one ISA of the same type and switch between providers will give people the freedom to shop around for better deals and achieve better returns on their investment.

"And it means they can create a portfolio of ISA investments that’s more varied and balanced to their needs, which can provide security and peace of mind during times of market volatility."

The research found that more than two-fifths of UK adults surveyed (42%) have invested in ISAs, with more than three quarters (76%) of them opting for Cash ISAs and 29% choosing Stocks and Shares ISAs.

They are investing in ISAs to benefit from the tax advantages (51%), to grow their money (33%) and to invest for their retirement (25%).

Toby added: "ISAs are an extremely powerful savings and investment tool, so it’s concerning that that there are still so many misconceptions around ISAs, which means many are missing out.

"I’d urge savers to take a good look at how they can make the most of the new flexibilities as soon as possible to maximise the time they have to benefit."

The value of your investments can go down as well as up and you may get back less than you put in.

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