24th June 2026
The biggest Rachel Reeves–era ISA rule changes coming into force (mainly from April 2027) are as follows.
A 22% tax on interest earned on cash held inside Stocks & Shares ISAs.
A reduction of the Cash ISA allowance to £12,000 for under‑65s (while the overall ISA limit stays £20,000).
No transfers allowed from Stocks & Shares ISAs into Cash ISAs.
A new First‑Time Buyer ISA replacing the Lifetime ISA.
New rules restricting “cash‑like” investments inside non‑cash ISAs.
Below is the full breakdown with citations and context.
The Major ISA Rule Changes
1. 22% tax on cash held inside Stocks & Shares ISAs
From April 2027, any interest (or “alternative finance return”) earned on cash held inside a Stocks & Shares ISA will be taxed at 22%.
This is designed to stop people using S&S ISAs as a loophole to hold large amounts of tax‑free cash.
Previously, all cash inside S&S ISAs earned interest tax‑free.
2. Cash ISA allowance cut to £12,000 for under‑65s
From April 2027, the annual Cash ISA allowance for those under 65 will fall from £20,000 to £12,000.
Over‑65s keep the full £20,000 cash allowance.
The overall ISA limit remains £20,000, but younger savers must put the rest into investment ISAs.
3. No transfers from S&S ISAs into Cash ISAs
Transfers from Stocks & Shares ISAs → Cash ISAs will not be allowed.
Cash ISAs → S&S ISAs will still be allowed.
This is to prevent people subscribing £20k into an S&S ISA and then shifting it into cash.
4. Restrictions on “cash‑like” investments
Money market funds will be the only recognised “cash‑like” assets.
S&S ISAs will not be allowed to be fully invested in cash‑like assets.
100% cash‑like portfolios will be treated as non‑qualifying.
5. New First‑Time Buyer ISA replacing the Lifetime ISA
A new account is being introduced with:
No upper age limit (unlike the Lifetime ISA’s age‑40 cutoff).
25% government bonus, but paid only at the point of buying a property, not annually.
No 25% withdrawal penalty for non‑property withdrawals.
Additional Related Changes
Lifetime ISA scrapped
The LISA is being phased out as part of the reforms.
Investment eligibility changes
From April 2026 (slightly earlier than the other changes):
Long‑Term Asset Funds (LTAFs) become eligible for Stocks & Shares ISAs.
Crypto ETNs restricted to Innovative Finance ISAs only.