Major savings providers ignoring new cash Isa rule for 2024-25
Savers have been allowed to open and fund multiple cash Isas since 6 April 2024. But Which? has found many banks are not offering the new flexibility when it comes to their own products.
We found that four out of five of the most popular savings providers still limit cash Isas to one per customer and some are giving out of date information either on their websites, in their terms and conditions, or through advisers.
Here, Which? reveals how banks have been slow to adopt new freedoms for cash Isas and explains what the rules actually mean for Isa customers.
What the new rules say
Since April 2024, savers have been allowed to open and pay into multiple Isas of the same type annually. That replaced previous rules that only let you put money into one of each type of Isa every tax year. The change was meant to be good news for savers, especially those who opened a fixed Isa but still have some remaining allowance to invest.
Despite the promise of greater choice for customers, the rules are not mandatory and providers are under no obligation to embrace these new freedoms when it comes to their own products. However, while a bank can limit subscriptions to a single Isa provided by them, they cannot prevent savers opening accounts with another Isa provider.
While banks are perfectly within their rights to limit how many of their own Isas customers can open, these providers are not really acting in the spirit of the new rules.
It means savers could miss out on the best rates at times. For example, it may be the case that your current provider offers the top interest deal for both an easy access and one-year fixed Isa. If the bank doesn't allow customers to open multiple cash Isas, you could be forced to settle for a lower rate elsewhere for the additional account.
- Find out more: cash Isa rules and allowances
'Virgin Money told me I couldn't fund multiple cash Isas'
Savers have been allowed to open more than one cash Isa since 6 April 2024. So it came as a shock to Peter Saunders when Virgin Money said he could only invest in a single account per tax year.
The Which? member, whose fixed cash Isa with Virgin Money expires this financial year, messaged the bank online, asking if he could renew the product when it matures and open a second one with a different provider at the same time.
The response that came back, however, was disappointing. The adviser explained that he could open as many cash Isas as he wanted but, he could only pay into one of them. He was also told it wasn't possible to split his annual allowance between two different Isa accounts from separate providers.
Which? contacted Virgin Money and the bank admitted the information provided to Saunders was incorrect. The bank apologised, saying the single Isa limit only applies to their own products and savers are welcome to open as many accounts they want from other providers.
Virgin Money told Which? it hasn't adopted the new Isa rule but its products and propositions remain under constant review, and this could be subject to change.
While Saunders is relieved to hear this news, he's frustrated over inconsistencies in banks' adoption of the new rules.
'All the banks seem to have different rules and you don't know until you ask them directly,' he says. 'The more complicated they make it, the more people aren't sure what to do.'
Many providers still impose a single Isa limit
To get an idea of how many banks still limit customers to opening only one of each type of Isa every tax year, we approached the five biggest savings providers in the UK: Barclays, Nationwide, HSBC, Lloyds Bank and NatWest.
We found, however, that only Nationwide currently allows customers to open and fund more than one of its Isa accounts. The other four banks told Which? they are looking into doing so in the future.
A Barclays spokesperson told Which?: 'We fully support the Isa changes and intend to make these available to customers as soon as possible. Post receiving the final Isa guidance on 6 April, we are now working through how quickly we can make those changes which are complex and require industry transfer system changes.'
How do Isa providers offering top rates compare?
This table shows which providers offering the best rates on the market allow customers to open multiple cash Isas with them, ordered by rate.
| Easy access cash Isa | Allow multiple cash Isas? | 1-year cash Isa | Allow multiple cash Isas? | 5-year cash Isa | Allow multiple cash Isas? |
|---|---|---|---|---|---|
| Zopa, 5.08% AER | Yes | Punjab National Bank (International) Limited, 4.8% AER | No | State Bank of India, 4.15% AER | No |
| Newcastle Building Society, 5% AER | Yes | Progressive Building Society, 4.75% | No | UBL UK, 4.07% AER | Yes |
| Charter Savings Bank, 4.97% AER | Yes | United Trust Bank, 4.73% | No | Shawbrook Bank, 4.07% AER | No |
| Paragon Bank, 4.95% AER | Yes | Charter Savings Bank, 4.73% AER | Yes | Close Brothers Savings, 4.05% AER | Yes |
| Family Building Society, 4.86% AER | No | Shawbrook Bank, 4.72% AER | No | Zopa, 4.01% AER | Yes |
Source: Moneyfacts. Correct as of 17 May 2024, but rates are subject to change. All providers listed offer choice of cash Isa products and include those that place limits on withdrawals. Punjab National Bank, United Trust Bank, and State Bank of India failed to answer our email request in time and information was provided by a telephone adviser.
Four out of five providers offering the best easy access deals allow customers to open more than one of their cash Isa products at the same time. Only the Family Building Society, with a rate of 4.86% AER, doesn't.
For one-year Isas, it's the other way round, with only Charter Savings Bank embracing the new rules. While three out of five providers offering five-year Isas give customers flexibility over how many accounts they hold.
Customers getting out of date information
We also found some providers are still including out of date information about Isa rules on their websites.
For example, Barclays still gives customers out of date information regarding Isa rules on its website and in the terms and conditions page online.
When Which? asked why its website doesn't mention the current Isa rules for 2024-25, Barclays told us it was in the process of updating its website and app to provide detail on the changes and the bank's approach.
Out of the providers offering the top rates for a five-year Isa, the small print for State Bank of India's Isas are in need of a refresh and UBL UK's website still says you can only fund one cash Isa a year.
Punjab National Bank (International) Limited also hasn't updated its Isa T&Cs page since July 2023, but a pop-up when you visit the site explains it has chosen not to opt-in to all non-mandatory cash Isa rules and so previous terms and conditions still apply.
4 other ways Isas changed this year
In November's Autumn Statement, the Chancellor announced several changes which came into force from 6 April 2024:
1. Minimum age raised
The minimum opening age for adult cash Isas was raised from 16 to 18 years old. This change brought the product in line with the minimum age requirement for other types of adult Isa.
If you're aged between 16 and 17, you can continue to open and save into a Junior Isa. The downside is that the annual tax-free allowance on a Jisa is significantly less than adult Isas at only £9,000.
- Find out more: best Junior Isas
2. Partial transfers
You can now transfer part of your account balance from one Isa provider to another, no matter when the money was paid in. Under previous rules, you had to transfer your entire Isa of that type from the current tax year or nothing at all.
The change means that you can now keep some funds with your existing provider and retain that account.
3. No need to reapply
Up until 5 April 2024, savers and investors were required to effectively reapply for Isas they already hold if the account had been lying dormant for one tax year.
This rule has now been scrapped and the Isa will remain open, ready for you to resume use of, if and when you wish.
4. Innovative finance Isa boost
Finally, the range of permitted investments for these Isas has been expanded to include long-term asset funds and open-ended property funds with extended notice periods.
