Among the many rumoured items that could feature in the Chancellor's autumn statement are tweaks to the rules around individual savings accounts (Isas).
There have been several reports that Jeremy Hunt and HM Treasury could allow savers and investors to open multiple Isas of the same type in a single tax year.
Currently, you can only open different types of Isa account in the same year, such as a stocks & shares Isa and a cash Isa.
Almost 12 million people opened an Isa in the tax year 2021-2022, according to the latest official HMRC figures, slightly down on the previous tax year as the number of cash Isas subscriptions decreased by 920,000 and the number of stocks & shares Isas increased by around 345,000.
A previously mooted idea - since rumoured to have gone cold - was to create a new ISA, with its own allowance, exclusively for investing in UK shares.
“An increase in the ISA allowance would be a shot in the arm for investors battered by cuts in the allowances for dividend tax and capital gains tax," said Sarah Coles, head of personal finance at Hargreaves Lansdown.
"It would release pent up demand and allow more money to naturally flow into UK stocks and shares."
Brian Byrnes, head of personal finance at Moneybox said: "The anticipated changes in the Chancellor's statement to give savers more ISA flexibility, and freedom to open multiple accounts, would be a welcome shift for millions across the country – allowing people to best-optimise their tax-free allowances and shop for the best deals available to them."
Jason Hollands, managing director of Bestinvest, added that the talk about a major shake-up of Isas "could all turn out to be a bit of a damp squib" as the most recent reports suggest the government has cooled on the idea of an extra UK ISA allowance and the main initiative will now be to let people open multiple ISA accounts with different providers each tax year, providing they do not exceed the overall annual allowance.
"Although some additional flexibility is broadly welcome, if this is all that is in store then the vaunted great ISA shake-up could prove underwhelming."
Autumn statement rumour mill
- A consultation may be held over major Isa reforms, to enable the government and the industry to explore the implications.
- There may also be a move to address the fact that fractional shares can’t be held in an ISA to protect them from tax.
- Long term asset funds (LTAFs) could be added to Isas, now the FCA has set out the conditions for distribution to the retail market. At the moment, LTAFs cannot be held within an Isa as all assets within the wrapper need to have the ability to be sold within 30 days. "This rule could be applied on a permissive basis, so firms that are happy to distribute LTAFs could do so within an ISA. This would simultaneously mean real fixed term cash ISAs could be introduced – which can’t be accessed for a penalty – which could improve the fixed rate ISAs available on the market," said Coles.
- Tax cuts are always mooted, but had been expected to be postponed so that the chancellor could unveil a potential General Election vote-winning Budget in the spring. However, the Office for Budget Responsibility has indicated there is headroom for more spending or tax cuts, which could disappear by the spring. Inheritance tax and stamp duty are both thought to be in the frame.
- There have been reports that tougher benefits rules could be brought in for people who are too sick to work, with potential removal of the work capability assessment.
- First-time buyers could be offered more mortgage support, with the current mortgage guarantee scheme set to run into December.
- Alcohol duty is expected to rise again with RPI inflation – pushing the price of an average bottle of red wine to £8.
- Fuel duty could rise for the first time in a decade, one report said, but would seem to run in the face of PM Rishi Sunak's motorist-friendly rhetoric.
- Cut to the Lifetime Isa (LISA) penalty have been called for, as currently anyone needing to withdraw money for any reason other than a first-time property or after the age of 60 is hit with a 25% penalty. This not only claws back the government bonus to save, but also applies an additional 6.25% penalty based on the amount invested.
- There have also been calls to raise the limit on the price of a property you can buy with a LISA. But reports suggest this has been rejected.