UK to tax cash in stocks-and-shares ISAs at 22% from 2027

The UK government has confirmed a major overhaul of ISA rules, including a new tax on cash held in investment accounts and the launch of a consultation on a new first-time buyer ISA. The changes, detailed in announcements on Tuesday, June 23, 2026, are designed to encourage more people to invest in stocks and shares.

From April 6, 2027, a flat-rate charge of 22% will be applied to any interest earned on cash held within stocks and shares ISAs. This measure is intended to prevent savers from using these investment wrappers to circumvent forthcoming restrictions on cash ISA allowances. Simultaneously, the annual cash ISA allowance for individuals under 65 will be reduced from £20,000 to £12,000, while the overall ISA allowance and the cash limit for those aged 65 and over will remain at £20,000.

Officials from HM Revenue and Customs stated that new regulations will also restrict transfers from non-cash ISAs into cash ISAs and limit holdings of cash-like investments, specifically money market funds, within investment accounts. A technical consultation on the draft legislation is set to begin shortly, with final regulations expected to be laid in autumn 2026.