Tax on cash in stocks and shares ISAs from April 2027
Budget 2025 confirmed two changes to ISAs from April 2027. The cash ISA limit for savers under 65 drops from £20,000 to £12,000, and savings income tax rates rise by 2 percentage points across all bands (basic rate becomes 22%). HMRC's November 2025 tax-free savings newsletter also said interest on cash held inside a stocks and shares ISA or an innovative finance ISA will be charged from April 2027. The rate is not in draft legislation yet but is widely expected to match the new 22% basic-rate savings tax. Industry will be consulted before the rules are laid before Parliament.
This is not CGT
Sell a fund inside the ISA at a profit, you still owe no CGT. Receive a dividend from a UK share, still tax-free. The new charge applies to one thing: interest on cash sitting in the wrapper. Money market funds are likely caught too. The Treasury has said it will not allow obvious substitutes.
Who feels it
If your ISA is fully invested in equities or funds, the charge is a rounding error. If you have been parking £20,000 in the cash sweep account waiting for a market dip, the charge is aimed at you. At 22% and 4% interest, that costs you about £176 a year.
What to do
Nothing in 2026-27. The charge starts in 2027-28. Before April 2027, check how much cash is actually sitting inside any stocks and shares ISA. If you want to move it into a cash ISA, do it before transfers from S&S ISAs into cash ISAs are blocked.
If you need a buffer, a separate cash ISA at the new £12,000 limit, or an ordinary savings account inside your Personal Savings Allowance, is a better home for it.
Where this touches CGT
Bed and ISA still works the same way. See our walkthrough. Disposals inside an ISA stay off your SA108. The new charge sits on the income side of your return and is reported by your broker, so the CGT pipeline in our calculator does not change.