New 22% tax on stocks and shares ISAs – what you need to know

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.