Three in four people still unaware of ISA rule overhaul

Over three quarters (78%) of UK adults are still unaware of new ISA rule changes that are set to come into effect in April, new research by Wesleyan Financial Services has indicated.

The rule changes, announced by the Chancellor in the autumn statement, are designed to simplify the scheme and encourage more people to invest tax free, allowing for a more ‘balanced’ investment portfolio.

These include allowing investors to open multiple ISAs of the same type every tax year.

However, in a survey of 2,000 UK adults by Wesleyan, 78% said they did not know about this rule change.

Furthermore, when told about the imminent shake up, 31% said the changes would make them want to invest more money into ISAs.

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

Seven in 10 (70%) of those surveyed said they don’t know how different types of ISA work.

Of those who don’t hold ISAs, 45% believe that you need a large amount of money to open an ISA, while 22% saidthey don’t want to lock their money away where they can’t access it.

Deputy chief product officer at Wesleyan Assurance Society, Toby Hester, 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 more 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 & Shares ISAs.

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

Hester added: "ISAs are an extremely powerful savings and investment tool, so it’s concerning 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."

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