--- title: The new ISA rules that could trigger a 22% tax charge description: New ISA rules mean that keeping cash in a Stocks and Shares ISA could now trigger a tax charge on interest. Reviewing your ISAs and cash distribution could help image: https://www.integritasfp.co.uk/hubfs/Integritas%202_1000x667-1.jpg --- - [01283777014](tel:01283777014) - [enquiries@integritasfp.co.uk](mailto:enquiries@integritasfp.co.uk) [facebook-f icon](https://www.facebook.com/IntegritasFP) [linkedin-in icon](https://www.linkedin.com/company/integritas-financial-planners-ltd/) [REQUEST CONSULTATION](https://www.integritasfp.co.uk/book-a-meeting) [![integritaslogo](https://www.integritasfp.co.uk/hs-fs/hubfs/Integritas_Theme_Mar2022/integritaslogo.png?width=510&height=82&name=integritaslogo.png "integritaslogo")](https://www.integritasfp.co.uk/) ![Vouched For Top Rated 2019 - 2024](https://www.integritasfp.co.uk/hs-fs/hubfs/Vouched%20For%20Top%20Rated%202019%20-%202024.png?width=762&height=162&name=Vouched%20For%20Top%20Rated%202019%20-%202024.png) ![Integritas-vouchedfor-badge](https://www.integritasfp.co.uk/hubfs/Integritas_Theme_Mar2022/Integritas-vouchedfor-badge.webp) - [Home](https://www.integritasfp.co.uk) - [Our services](https://www.integritasfp.co.uk/services) - [Pension Advice](https://www.integritasfp.co.uk/services/pension-advice) - [Investment Advice](https://www.integritasfp.co.uk/services/investments/) - [Mortgage Advice](https://www.integritasfp.co.uk/services/mortgage-advice/) - [Protection](https://www.integritasfp.co.uk/services/protection/) - [Wills and Lasting Power of Attorney](https://www.integritasfp.co.uk/kinherit-partnership) - Why Integritas - [Why Integritas](https://www.integritasfp.co.uk/about-integritas) - [Meet the Team](https://www.integritasfp.co.uk/meet-the-team) - [Testimonials](https://www.integritasfp.co.uk/about-integritas/testimonials/) - [Sponsorship](https://www.integritasfp.co.uk/sponsorship/) - [Referral Incentive](https://www.integritasfp.co.uk/referral-incentive) - Resources - Client Agreement - [Terms and Conditions](https://www.integritasfp.co.uk/resources/client-agreement/) - [Services and Charges](https://www.integritasfp.co.uk/resources/client-agreement/-services-and-charges) - [10 Point Financial Checklist](https://www.integritasfp.co.uk/10-point-financial-checklist/) - [Protection Review Guide](https://www.integritasfp.co.uk/protection-review) - [A Guide To Pension Consolidation](https://www.integritasfp.co.uk/guide-to-pension-consolidation) - [Blog](https://www.integritasfp.co.uk/blog) - [Glossary](https://www.integritasfp.co.uk/glossary) - [Client Area](https://integritasfinplan.gb.pfp.net/) - [Contact Us](https://www.integritasfp.co.uk/contact-us) # The new ISA rules that could trigger a 22% tax charge Aug 18, 2026 | [0 comments](https://www.integritasfp.co.uk/blog/the-new-isa-rules-that-could-trigger-a-22-tax-charge#respond) ![The new ISA rules that could trigger a 22% tax charge](https://www.integritasfp.co.uk/hubfs/Integritas%202_1000x667-1.jpg) ISAs are one of the most popular ways to save and invest wealth in a tax-efficient manner, as interest and returns generated are usually free from Income Tax, Capital Gains Tax (CGT), and Dividend Tax. According to [Finder](https://www.finder.com/uk/share-trading/share-trading-research/stocks-and-shares-isa-statistics), 46% of UK adults have at least one Cash ISA, while 26% have a Stocks and Shares ISA. New rules surrounding ISAs are set to come in from April 2027, which will change the way under-65s can distribute their annual ISA allowance across these products. However, another lesser-known change will also come into effect at the same time, which could potentially trigger a 22% tax charge without careful planning. Read on to find out more. ## **The upcoming Cash ISA limits are designed to promote investment, but they could also lead to a tax charge** In 2026/27, the annual ISA allowance is £20,000 for everyone, meaning this is the total amount you can put across all your ISAs. However, from next year, the allowance will remain at £20,000, but if you’re under 65, there will be a £12,000 limit for your Cash ISA. The remaining £8,000 will be solely reserved for investment ISAs. If you’re over 65, the rules will remain as they are, and you can use your £20,000 allowance as you wish. If you’re under 65, from April 2027 you will also no longer be able to transfer funds from a Stocks and Shares ISA into a Cash ISA. Again, if you’re over 65, this restriction won’t apply. The government is introducing the changes in a bid to boost investment and shift wealth away from low-interest cash accounts, with the aim of stimulating the economy. With this in mind, it is also introducing measures to stop people from circumventing the £12,000 cash restriction by putting the remainder of their allowance into a Stocks and Shares ISA and leaving it as cash. Under the current rules, you can hold uninvested cash in a Stocks and Shares ISA, and the interest on this is usually tax-free. However, from April 2027, interest generated on any uninvested cash held in a Stocks and Shares ISA will be subject to a flat-rate 22% tax. For example: - £10,000 in cash in your Stocks and Shares ISA earning 4% interest would give you £400 in interest. - From April 2027, this will be taxed at 22%, so you’d pay £88. It’s important to be clear that this tax is not being introduced on anything other than cash held in a Stocks and Shares ISA, and it will only apply to the interest. Any returns, capital gains, or dividends you make from investments within the ISA will usually be tax-free as normal. ## **There are several reasons you might hold cash in a Stocks and Shares ISA** Holding cash in a Stocks and Shares ISA might seem like a strange thing to do, but it can be quite common for several reasons, such as: - You’ve sold an investment and haven’t yet reinvested the proceeds - You’re waiting for the right investment opportunity - You’re gradually investing a large lump sum - You’re maintaining a small cash balance to cover any fees. For the most part, these are temporary reasons for holding cash, as it’s passing through your Stocks and Shares ISA. The government is trying to discourage people from actively using their Stocks and Shares ISA as a long-term savings account for cash. ## **Get in touch** These upcoming changes mean it’s important to review your ISA arrangements if you’re under 65. Cash savings tend to be better suited for more short-term purposes, while investments are generally used to grow your long-term wealth. Both can have their place in your financial strategy, but it’s important to make sure you’re saving and investing in the most tax-efficient manner. If you’d like to talk to us about reviewing your ISAs, we’ll be happy to help. Please email [enquiries@integritasfp.co.uk](mailto:enquiries@integritasfp.co.uk) or call 01283 777014. ## **Please note** This article is for general information only and does not constitute advice. The information is aimed at individuals only. All information is correct at the time of writing and is subject to change in the future. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change. The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances. The Financial Conduct Authority does not regulate tax planning. 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