Rachel Reeves blasted over new ISA plans | Personal Finance | Finance
Last month, the Government announced a 22% charge on the interest on cash savings held within non-cash ISAs, including stocks and shares ISAs. Now, financial experts are reacting to the plans, which come into effect from April 2027. One even said that the desired result will not be achieved, and that the change will actually have the opposite effect. The new 22% charge will apply to all investment ISA holders, not just those under the age of 65.
It comes after Rachel Reeves confirmed the Government’s plans to reduce the tax-free Cash ISA allowance to £12,000 from the current £20,000 from next year, with the exception of savers over the age of 65. The latest ISA change, confirmed by HMRC on June 23, 2026, is designed to stop savers from simply using investment ISAs to store cash when the Cash ISA limit is dropped. It is understood that Rachel Reeves hopes this will lead to more investment, but experts say the opposite will likely happen.
Wander Rutgers, UK CEO of investment platform Lightyear, told Investment Week: “The government is selling these ISA reforms as a way to get more people investing, but they will do the opposite.
“The single biggest reason people do not invest is that it feels complicated, and these rules pile on more complexity, not less.”
Meanwhile, Anna Macdonald, investment strategy director at Hargreaves Lansdown, said that this new rule will make investing even harder for people to understand, which would mean people remain intimidated by the concept.
“It is hard to see how adding this level of complexity will encourage more people to invest in stocks and shares,” she said.
Kevin Mountford, personal finance expert and co-founder of Raisin UK, said: “Any change to ISA rules risks creating confusion for savers, particularly when many people are already trying to make their money work harder in a higher-tax environment.”
He warned savers with cash in a Stocks & Shares ISA to check with their provider to see how the money will be treated from April 2027.
“For savers, the priority should be to check what type of ISA they have and where any cash is sitting,” he said. “If you are holding cash inside a stocks and shares ISA, particularly for a long period rather than as a short-term step before investing, it may be worth speaking to your provider about how the upcoming rule changes could affect you.
“Consumers should not feel rushed into investing because of rule changes, but they should take this as a reminder to review their savings, compare rates and make sure they are using tax-free allowances where possible.”
