Planned changes to Individual Savings Accounts (ISAs) have been abandoned – after being legislated for.
In her 2025 Budget finale, Rachel Reeves said, “Someone who’s invested £1,000 a year in an average stocks and shares ISA every year since 1999 would be £50,000 better off today than if they’d put the same money into a cash ISA. And so from April 2027, I will reform our ISA system…”. At the time it was unclear how radical the reform would be and not everyone was convinced the Chancellor solely had the interest of savers in mind.
In mid-September 2026, shortly before the new Chancellor, John Healey, stood before the despatch box, a set of ISA regulations were issued that clarified matters. Broadly speaking, the regulations meant that from 6 April 2027:
Regardless of your age:
If you held uninvested cash in a stocks and shares ISA, any interest earned would be subject to a ‘flat rate charge’ of 22% (equal to the Budget 2025 savings basic rate from 2027/28).
A stocks and shares ISA would not hold only Money Market Funds or such funds plus uninvested cash.
If you were under 65 by the end of the tax year:
The maximum subscription that you could pay into a cash ISA would be £12,000 per tax year, with the overall ISA limit unchanged at £20,000.
You would not be able to transfer from a non-cash ISA to a cash ISA, although transfers in the opposite direction would be permitted.
On 28 October, John Healey performed what is sometimes referred to in media circles as ‘a reverse ferret’. He announced, “I will not go ahead with the cut to the tax-free amount that people can put into a cash ISA. The limit will stay at £20,000 per year, tax-free, for people of all ages…”. In a document issued on the following day, it emerged that September’s ISA regulations would be revoked. The Budget also gave Lifetime ISAs (LISAs) a stay of execution. Their replacement, the First Time Buyer ISA, will not now be launched until April 2029.
Overall, the ISA (non-)changes are good news for investors, although ISA providers will probably feel frustrated at having spent the last few months preparing for those abandoned changes.
Read more about the government’s plans for ISA rules and plans for savings here.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.
