Overview
- HMRC and the Treasury published a factsheet on 23–24 June confirming a flat 22% charge on interest or alternative finance returns earned on cash held inside stocks and shares (non-cash) ISAs.
- The package also bars transfers from non-cash ISAs into cash ISAs and will disqualify non-cash ISAs that are 100% invested in money market funds, with definitions and reporting rules set out for cash-like holdings.
- The changes follow the autumn 2025 Budget cut to the cash ISA allowance for under-65s from £20,000 to £12,000 and will take effect from 6 April 2027 after a technical industry consultation and autumn regulations.
- Industry groups and providers say the measures add complexity, may reduce the appeal of stocks and shares ISAs, and risk unintended behaviour such as providers changing how they pay interest or savers avoiding investment altogether.
- The Treasury has opened a separate consultation to replace the Lifetime ISA with a First Time Buyer ISA that would pay any government bonus at exchange, but key design details such as the bonus rate, contribution limits and price cap remain unspecified.