Individual Savings Accounts: subscription limits for 2017 to 2018 and other changes to ISA rules
Published 23 February 2017
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This publication is available at https://www.gov.uk/government/publications/individual-savings-accounts-subscription-limits-for-2017-to-2018-and-other-changes-to-isa-rules/individual-savings-accounts-subscription-limits-for-2017-to-2018-and-other-changes-to-isa-rules
Who is likely to be affected
Individual savers with an Individual Savings Account (ISA), children with a Junior ISA and banks, building societies and other financial institutions who offer ISAs.
General description of the measure
The measure increases the amount that can be saved in an ISA or a Junior ISA. The subscription limit for ISA in the tax year 2017 to 2018 will be £20,000, and the subscription limit for a Junior ISA during the same period will be £4,128. The measure also includes minor updates to the ISA and Junior ISA rules to accommodate changes to other legislation.
Policy objective
The measure supports savers and ensures that children and families have access to suitable tax-advantaged savings products that meet their needs.
Background to the measure
The government announced at Budget 2016 that the annual ISA subscription limit would be increased from £15,240 to £20,000 from 6 April 2017.
The government announced at Autumn Statement 2016 that the annual Junior ISA subscription limit would be increased from £4,080 to £4,128 from 6 April 2017.
Detailed proposal
Operative date
The measure will have effect on 6 April 2017.
Current law
Account rules for ISA and Junior ISA are set out in the Individual Savings Account Regulations 1998 (SI 1998/1870) (ISA regulations), which are made under powers in the Income Tax (Trading and Other Income) Act 2005 and the Taxation of Chargeable Gains Act 1992.
ISA regulations set out the annual subscription limits for ISA and Junior ISA. They also specify which institutions can be approved to offer accounts, how accounts may be opened and permit sums to be withdrawn from a Junior ISA if the account holder is terminally ill. These provisions are framed with reference to appropriate provisions in other legislation relating to financial regulation, child protection and welfare.
Proposed revisions
The ISA regulations will be updated to increase the overall ISA annual subscription limit (currently £15,240) to £20,000 and the Junior ISA subscription limit (currently £4,080) to £4,128.
Other minor updates will also be made to the ISA regulations, for example to take account of changes to other legislation referred to in these regulations concerning the regulation of certain financial institutions, child protection and terminal illness.
Summary of impacts
Exchequer impact (£m)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|
| 0 | negligible | -10 | -20 |
The figures above are the estimated Exchequer impact from the higher ISA limit. These figures were included in the ‘Lifetime ISA and raise ISA limit to £20,000’ line in Table 2.1 of the Budget 2016 and have been certified by the Office for Budget Responsibility.
More details can be found in the policy costings document published alongside Budget 2016.
Economic impact
The measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
Around 12.7 million adults subscribed to ISA accounts in the tax year 2015 to 2016, and 740,000 Junior ISA accounts received contributions in the same period.
The measure will increase the amount that can be saved in ISA and Junior ISA accounts.
Other changes within this measure provide necessary updates to the legislation to take account of other legislative changes, and are not expected to have any practical impact upon the tax advantages or other entitlements currently enjoyed by ISA or Junior ISA holders.
The measures are not expected to affect family formation, stability or breakdown.
Equalities impacts
It is not anticipated that the measure will impact adversely on groups with protected characteristics.
Impact on business including civil society organisations
The measure is expected to have a negligible impact on businesses. Around 500 ISA providers will incur a negligible one-off cost to update their account systems to take account of the new subscription limits for the tax year 2017 to 2018. There are not expected to be any ongoing costs. There is no impact on civil society organisations.
Operational impact (£m) (HM Revenue and Customs (HMRC) or other)
The overall additional costs for HMRC in implementing these changes are anticipated to be negligible.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayer and provider groups.
Further advice
If you have any questions about this change, please contact Helen Williams on Telephone: 03000 512336 or email: savings.audit@hmrc.gsi.gov.uk.
Declaration
Jane Ellison MP, Financial Secretary to the Treasury has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.