Treasury denies claims of 22 per cent tax on ISAs

The Treasury has called the rumoured tax on ISAs “nonsense”. However, from the beginning of the 2027/2028 tax year there will still be some reforms to ISAs that shouldn’t be ignored.

To help you understand the changes, our tax team have dispelled the myths and looked at the new rules that savers need to consider.

What changes are coming to ISAs?

The changes to ISAs, announced during the Autumn Budget, will come into effect from April 2027.

They will see your total tax-free allowance remain the same at £20,000, however, for those under the age of 65 the way you can use this allowance will change.

There is now a limit of £12,000, which can be put into a cash ISA in one tax year for those aged under 65.

This is opposed to the full £20,000 which has always been free to save or invest how the ISA user saw best. The remaining £8,000 must be put into Stocks and Shares ISAs.

To prevent abuse of these allowance there will be a ban on transfers from Stocks and Shares ISAs back into a cash ISA.

How will the ISA changes affect me?

For the next tax year, you will be required to arrange your money differently as the Government will change the way you can save in favour of Stocks and Shares ISAs.

If you are already investing through a Stocks and Shares ISA, it is worth checking how much is held in your account.

The Government hopes the use of Stocks and Share ISAs will create an investment culture that will, in the long run, drive economic growth and help individuals yield higher returns in the long term.

How can I adjust my investment plan to be tax efficient?

Planning is vital for understanding how to manage your money ahead of the changes to how ISAs will operate.

If ISAs from part of your existing tax plan, then it is important to speak to a member of our team to review your wider strategy.

Contact us today for support on tax-efficient savings and investments.