Overview
- Late June announcements confirm a 22% charge on interest or cash-like returns held inside non-cash ISAs and a cut to the cash ISA annual allowance for under-65s from £20,000 to £12,000, with the rules due to take effect in April 2027.
- The Treasury frames the package as closing a perceived loophole that would let people keep large tax-free cash balances in stocks-and-shares ISAs instead of using dedicated cash ISAs.
- Banks, wealth managers, consumer groups and advisers have warned the levy will penalise cautious savers, complicate de-risking before life events, and could deter new or risk-averse investors from using ISAs.
- Industry bodies and platforms have raised practical questions about how the 22% charge will be collected and reported, noting there is no settled approach yet and a technical consultation and autumn regulations remain to set the operational rules.
- The wider package also restricts transfers from stocks-and-shares ISAs into cash ISAs and changes treatment of cash-like investments such as money market funds, and ministers say some building societies back the reforms while critics call them a stealth tax.