Major ISA rule changes will come into force next year
DWP sending ‘last’ payments to Attendance Allowance and Pension Credit claimants
Some savers could soon be hit by huge tax charges under new rules reportedly being considered by Chancellor Rachel Reeves.
It’s all to do with changes to cash ISA rules from 2027.
The annual tax-free limit will be cut from the existing £20,000 rate down to £12,000 for savers aged under 65.
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But savers will still be able to use an overall £20,000 ISA allowance – just in a different way.
Households could save £12,000 into a cash ISA and £8,000 into a stocks and shares ISA.
The aim of the change is to encourage more people to invest in stocks and shares and boost the economy, Mirror reports.
But the Telegraph reports people could face a 22% charge on interest earned from cash held in stocks and shares ISAs from April 2027.
HMRC had previously confirmed savers with cash in stocks and shares accounts would face a charge, but had not confirmed the rate.
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It means savers face being stung by the taxman as a result of the ISA rule changes.
Rachel Vahey, of investment platform AJ Bell, told the newspaper: “This really does need resolving if the Treasury wants to keep to the timeline of April 2027. It leaves us with very little time to make changes.”
A Treasury spokesman told the Mirror: “We are reforming the cash ISA to encourage more people to invest in stocks and shares – which have historically performed better than cash savings – and we have retained the generous £20,000 tax-free limit.
“These changes will make people better off and will not require anyone to move existing savings from their cash ISA.
“The vast majority of savers will continue to pay no tax on their savings and HMT and HMRC are working at pace with industry on the detailed rules and will update on next steps in due course.”
