Monzo has provided important advice to its customers regarding forthcoming changes to Individual Savings Account (ISA) allowances, aiming to support savers in maximising their savings growth.
Jo Phillips, Monzo’s General Manager for Wealth, highlighted the need for account holders to prepare for significant adjustments due to take effect next April. Currently, savers under 65 can deposit up to £20,000 each tax year into tax-free ISAs, distributed between cash ISAs and stocks and shares ISAs as they choose.
However, from April, the cash ISA allowance for savers under 65 will be reduced to £12,000. The remaining £8,000 of the £20,000 annual limit will be reserved exclusively for investments in stocks and shares ISAs. Phillips advises customers to “get ahead” of these changes by continuing to use their full ISA allowance for the present tax year and planning their investments accordingly.
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She emphasised the importance of making full use of tax-free interest opportunities: “My advice to savers is to keep making full use of your annual ISA allowance where you comfortably can - it remains a vital way to earn tax-free interest on your hard-earned savings.” Phillips also recommended beginning to research investment options or starting to invest small amounts now to adapt to the forthcoming limits.
This shift in policy is designed to encourage more individuals to invest, as investment returns from stocks and shares typically outperform cash savings interest rates over the long term. However, Phillips notes that to effectively motivate savers, the investment system must become “simpler and more accessible.”
Monzo has been actively addressing this by lowering barriers to investing. Account holders can begin investing with as little as £1 through Monzo’s automated features, which facilitate regular, small contributions. Since launching their investment services, a third of Monzo’s customers have been first-time investors, and over half now invest at least once every 30 days.
To access Monzo’s investment options, which include stocks and shares ISAs and general investment accounts, customers must hold a Monzo current account.
Phillips calls for further policy enhancements to empower savers: “Ultimately, the priority should be creating a policy framework that enables firms to use technology, personalised support, and real-time financial information to help more people take charge of their long-term finances.”