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New Rules Set to Stop Savers Getting Around Reduced Cash ISA Limit
The charge aims to close loopholes from the cash ISA allowance cut, affecting millions with a £12,000 limit from April 2027, excluding those over 65, HMRC said.
- On Wednesday, Chancellor Rachel Reeves announced the cash ISA allowance will drop from £20,000 to £12,000 for under-65s from April 2027, while the overall adult ISA contribution cap remains at £20,000.
- HMRC said it will introduce rules to avoid circumvention of the lower cash ISA limit, including taxing interest in stocks and shares ISAs and Innovative Finance ISAs and testing for 'cash-like' investments.
- Some 7.1 million Cash ISA holders contributed in 2022/23, with almost 1.5 million basic-rate and 462,000 higher-rate taxpayers depositing over 12,000, risking tax costs of 288 to 1,080, Andrew Prosser said.
- Bestinvest's Jason Hollands warned that industry concerns include unanswered questions about the reduced 12,000 limit and potential costs passed to savers, during industry consultation.
- A consultation early 2026 will consider replacing the Lifetime ISA with a new first-time-buyer ISA product that removes withdrawal charges, noting around 964,000 LISA accounts exist.
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Millions of savers to face £1,200 tax bill under new ISA reforms — Will you be one of them?
British savers face increased tax liabilities after Chancellor Rachel Reeves announced major reforms to ISA allowances and savings income rules in the Budget.The Treasury’s measures alter both the annual cash ISA limit and the taxation of savings interest, creating higher future costs for basic and higher-rate taxpayers.Research from investment platform InvestEngine shows around two million people who paid into cash ISAs during the 2022/23 finan…
·London, United Kingdom
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500,000 UK households could face HMRC tax bill of £1,080 from 2027
The Labour Party Chancellor has cut the Cash ISA allowance from £20,000 to £12,000, which could result in higher-rate taxpayers losing up to £1,080 in tax over five years from April 2027
·Newcastle upon Tyne, United Kingdom
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Total News Sources9
Leaning Left0Leaning Right2Center5Last UpdatedBias Distribution71% Center
Bias Distribution
- 71% of the sources are Center
71% Center
C 71%
R 29%
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