The UK Treasury has announced a new personal finance policy introducing a flat 22 percent tax charge on interest paid on uninvested cash held within stocks-and-shares and innovative finance Individual Savings Accounts (ISAs).
The measure takes effect on April 6, 2027.
>>> California Dealer Stockpiles 15 Dodge Challenger Demons, Including Seven Demon 170s
According to data from the tax office and the Bank of England, the overhaul aims to encourage savers to invest in the UK economy rather than holding assets in cash.
Additional reforms on the same date will reduce the annual cash ISA allowance from £20,000 to £12,000 for savers under 65 and ban transfers from stocks-and-shares ISAs to cash ISAs.
Bank of England data showed British households deposited £3.1 billion into cash ISAs in May, following a £12 billion surge in April, as savers rushed to maximize tax-free accounts before the limits drop.
Sarah Coles, head of personal finance at AJ Bell, highlighted the immediate public response to the upcoming restrictions.
"The dash for cash ISAs in May, on the back of a £12bn boost in April, shows people are filling their boots while they can," said Coles.
She noted that while cash remains vital for short-term emergency funds, individuals with excess money should consider long-term equities despite potential volatility.
>>> Shadows over Pattaya: The Tragic Loss of a Teenage Girl
"For a policy that was intended to encourage people to move away from cash and towards investing, this is hardly the result the government would have been hoping for," Coles added.
