In the Autumn Budget 2025, the government announced its new ISA reform for 2027. The idea is to encourage more people to invest, particularly in stocks and shares, rather than keeping large amounts in cash savings (the government believes too much money currently sits in cash ISAs rather than being invested).
From 6 April 2027
The total overall ISA allowance stays at £20,000. However, the Cash ISA allowance has been cut to £12,000 for under-65s and the Stocks & Shares/Innovative Finance ISA allowance remains at £20,000. This enables the under-65s to add the remaining £8,000 to one of these accounts to retain the full £20,000 tax allowance.
As over-65s are exempt, they can keep the full £20,000 Cash ISA allowance, from the start of the tax year they turn 65.
Anti-workaround measures
A 22% charge will apply to any interest earned on cash held within a non-Cash ISA (for example, cash sitting in a Stocks & Shares ISA). This is designed to stop people using investment ISAs as a workaround to hold cash, when the Cash ISA limit is cut from £20,000 to £12,000 a year for under-65s. ISA managers will pay this charge to HMRC directly; savers don’t declare it themselves.
Tax is complicated and its times like this where the expertise of a financial adviser is invaluable as they can explain the rules to you. If you already have a trusted financial adviser, they should have added appropriate funds to the correct investment.
Important caveat
This is still a proposal awaiting final legislation. A technical consultation with industry is ongoing and regulations are due to be laid in autumn 2026, ahead of the April 2027 start date. Money already in Cash ISAs before then isn’t affected.
Just get in touch if you’re considering investing in a Stocks & Shares ISA and I’d be delighted to help.
Source: gov.uk, 23 June 2026
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any Tax relief is dependent on individual circumstances.
SJP Approved 17/07/2027