Legal News | 2.07.26
ISA reform ahead of April 2027 – what is changing and why?
At the Autumn Budget 2025, the Government announced that changes would be made to the ISA rules. From April 2027, there will be an individual ISA cash limit of £12,000 for savers under the age of 65, which will apply within the overall annual ISA limit of £20,000 (the balance of £8,000 reserved for investing in stocks and shares ISAs).
The Government believes the introduction of a new cash ISA limit may lead to better returns for savers whilst also encouraging retail investment. Last week, further details were published as to how these changes will work in practice. We now know that:
- investors will still be able to hold cash in a stocks and shares ISA but a 22% charge will be applied to interest paid. We are told the 22% charge is a flat rate, meaning that the same rate will apply regardless of the marginal rate of tax paid by the taxpayer;
- transfers from stocks and shares ISAs to cash ISAs for those under 65 will be prohibited; and
- an ISA holder will not be able to invest the entirety of their stocks and shares ISA in ‘cash-like assets’, such as money market funds. Cash-like assets will still be permitted but only if they do not make up 100% of the investments held in a stocks and shares ISA.
A technical consultation with draft legislation will be published shortly by the Government and regulations laid later this year ahead of April 2027.
In the meantime, if you require further information or advice in connection with your own estate planning, please speak to your usual Wansbroughs contact or email wealth@wansbroughs.com.
