- New regulations will introduce a 22 per cent levy on interest earned from cash held within stocks and shares ISAs, effective from April 6, 2027.
- These rules aim to prevent individuals from depositing up to £20,000 cash into non-cash ISAs to accrue tax-free interest, circumventing future allowance changes.
- From April 2027, the annual cash ISA allowance will be reduced to £12,000, while stocks and shares and innovative finance ISA limits will remain at £20,000.
- The £20,000 cash ISA allowance will be maintained for individuals aged 65 and over.
- Industry bodies have expressed mixed reactions, with some welcoming clarity but others raising concerns about increased complexity and potential negative impacts on investor behaviour.
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