A tax-free account that now taxes you: Consumer Choice Centre slams 22% levy on cash in stocks and shares ISAs
The UK’s proposed ISA reforms penalise cautious savers and complicate investing
LONDON, UK – The Consumer Choice Centre (CCC) has criticised new ISA rules published by HM Revenue & Customs, which will impose a 22% charge on interest earned on cash held within non-cash ISAs from 6 April 2027.
The reforms will also reduce the annual Cash ISA allowance for people under 65 to £12,000, prohibit transfers from non-cash ISAs into Cash ISAs and prevent portfolios from consisting entirely of money-market funds.
“An ISA was meant to be the one place your savings could grow without the government taking a cut. Ministers will now take 22% of the interest earned on the safest money inside it and call that a reform,” said Yaël Ossowski, deputy director of the Consumer Choice Centre.
“This is a stealth tax on cautious savers dressed up as encouragement to invest. You don’t expand consumer choice by capping the accounts many people prefer and taxing the alternative. You herd risk-averse households into products they may not want. This is social engineering, not sound fiscal policy.”
The government says the measures are intended to encourage retail investment, but the reforms introduce age-tiered allowances, new transfer restrictions, a money-market fund rule and an interest charge. Industry analysts have warned that this added complexity could deter the very first-time investors ministers say they want to attract.
In a separate consultation, the Treasury proposed a new First Time Buyer ISA with no withdrawal charge and no upper age limit. However, the government has not yet set its subscription limit, bonus rate or property price cap. The existing Lifetime ISA cap of £450,000 has remained unchanged since 2017.
“The new account gets two important things right: no withdrawal penalty and no arbitrary upper age limit. But the Treasury should not carry a 2017 property ceiling into today’s housing market,” Ossowski added. “Ministers should drop the 22% interest charge and index the property cap to house prices. Help people save on their own terms. Don’t manage them harder.”
About the Consumer Choice Centre
The Consumer Choice Centre is an independent, nonpartisan consumer advocacy group championing the benefits of freedom of choice, innovation, and abundance in everyday life for consumers in over 100 countries. We closely monitor regulatory trends in Brussels, Washington, Ottawa, Brasilia, London, Geneva, and more. Learn more at consumerchoicecenter.org.
###