HMRC announces 22% tax on cash interest held in stocks and shares Isas
Summary
The UK government announced changes to Individual Savings Accounts (Isas), including a new first-time buyer Isa without an age limit and a 22% tax on interest earned on cash held inside stocks and shares Isas. The new rules aim to prevent people from holding too much cash in investment accounts and encourage investing in stocks and shares instead of just saving cash.Key Facts
- Savers can currently put up to £20,000 a year in Isas, which are tax-free accounts.
- The Lifetime Isa (for buying a first home or retirement) will end, replaced by a new first-time buyer Isa available to any adult over 18.
- The government will pay a 25% bonus on savings only when a property is bought, not yearly.
- The £450,000 property price cap for using the bonus remains under review but is currently unchanged.
- From April 2027, people under 65 can only put up to £12,000 per year in cash Isas.
- Interest earned on cash held inside stocks and shares Isas will be taxed at 22% starting from 2027.
- Investors can no longer keep all their stocks and shares Isa money in very low-risk cash-like funds.
- The changes are intended to encourage more investment in the stock market and reduce tax-free cash hoarding.
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