Overview
- The government has confirmed the annual cash ISA allowance for under‑65s will fall from £20,000 to £12,000 from April 2027, with over‑65s unaffected.
- Reports say ministers are planning a 22% charge on interest earned by cash held inside stocks and shares ISAs from the same date but that proposal has not been legislated and draft rules have been delayed for further HMRC and industry work.
- Treasury and HMRC are drafting anti‑circumvention measures that would treat wholly cash‑like portfolios as non‑qualifying, could force sale or transfer within 30 days, and would limit transfers from stocks and shares ISAs back into cash ISAs.
- Analysts note the direct cash cost will be small for most savers because stocks and shares ISAs typically pay low rates on uninvested cash, but industry says the broader package could add complexity and deter people from investing.
- Consumer and industry groups warn the changes may disproportionately affect older savers who hold larger cash buffers before retirement and they have highlighted a potential token‑equity '1p' workaround that officials say they are trying to close.