New £12,000 limit on Cash ISA

thunderroad88

This whole thread just reinforces what a dumb and ill thought through idea the whole thing is … to me anyway

zagfles

wmb194 said:

Time2Go_25 said:

The following rules will be introduced to avoid circumvention of the lower limit for cash ISAs:

• no transfers from stocks and shares and Innovative Finance ISAs to cash ISAs
• tests to determine whether an investment is eligible to be held in a stocks and shares ISA or is ‘cash like’
• a charge on any interest paid on cash held in a stocks and shares or Innovative Finance ISA

These only apply to those under 65

The link to this: https://www.gov.uk/government/publications/tax-free-savings-newsletter-19/tax-free-savings-newsletter-19-november-2025

Be interesting to see whether gilts will be allowed - if not it'll be rough on those who've built a gilts ladder in an ISA. 

Also some people will have been feeding the full ISA allowance into a S&S ISA for years and maybe have structured it to say 50% "cash like" and 50% equities, and it seems they'll now be forced to either remove/sell the "cash like" element or pay tax on it. Whereas if they'd been investing half in a cash ISA and half in a pure equity S&S ISA they'd be fine. 

They really should allow existing ISAs to remain under current rules, they could easily do this by saying the new rules only apply to ISAs that have been contributed to from 2027. 

Mistermeaner

And also allow whatever funds are deemed too ‘cash like’ to be available in a cash isa 

Aretnap

hallmark said:

phlebas192 said:

hallmark said:

masonic said:

hallmark said:

masonic said:

hallmark said:

• a charge on any interest paid on cash held in a stocks and shares or Innovative Finance ISA
  
  If confirmed that would be complex and absolutely disgusting.  Holding cash in a shares isa is entirely normal & reasonable, and in fact unavoidable for at least a certain amount of time (between depositing and buying, or between selling and buying).
  
  Are we now going to have to keep track of this & report it?  One of the attractions of ISAs is no tax stuff to worry about keeping track of.
  
  I recently transferred a fair chunk out of a cash ISA and into a shares ISA where it's currently in a MMF waiting to be invested.  So I'm now going to be penalised for that and treated like a tax-dodger? Despite having paid a shed-load of tax every year for over 40 years and adhered to every rule there is.

If you invest before April 2027, this will have no impact on you

That's now how I'm interpreting it? It sounds like this rule will apply to all cash/MMFs in shares ISAs, not just to cash deposited after April 2027?

You said your funds were in a MMF waiting to be invested. If you invest them before April 2027 they will no longer be in a MMF.

The MMF part doesn't bother me so much, I would leave unused funds as cash if need be.

Having to keep records of, and be charged income tax on, cash temporarily held in a shares ISA, very much bothers me.  Especially as it's money I chose to move from a cash ISA in the first place.  

You've got 16 months to move it back to a cash ISA if it worries you that much. No point getting worked up before we even know the details.

That doesn't solve the problem, bit of a glib response.

I want the money in a shares ISA.  I don't want to have the hassle of keeping track of interest earnt, or have to sanity check every investment to see if it's "allowable".  I'm sure you understand the issue.

I doubt very much whether you'll have to sanity check every investment to see if it's "allowable" - that will be for the ISA manager to worry about. Non-allowable investments simply won't appear on the list of funds/stocks that you are able to buy. As is already the case - there are types of investment now that you can hold in a general investment account but not in an ISA, such as shares on some non-mainstream stock exchanges.

Aretnap

zagfles said:

wmb194 said:

Time2Go_25 said:

The following rules will be introduced to avoid circumvention of the lower limit for cash ISAs:

• no transfers from stocks and shares and Innovative Finance ISAs to cash ISAs
• tests to determine whether an investment is eligible to be held in a stocks and shares ISA or is ‘cash like’
• a charge on any interest paid on cash held in a stocks and shares or Innovative Finance ISA

These only apply to those under 65

The link to this: https://www.gov.uk/government/publications/tax-free-savings-newsletter-19/tax-free-savings-newsletter-19-november-2025

Also some people will have been feeding the full ISA allowance into a S&S ISA for years and maybe have structured it to say 50% "cash like" and 50% equities, and it seems they'll now be forced to either remove/sell the "cash like" element or pay tax on it. Whereas if they'd been investing half in a cash ISA and half in a pure equity S&S ISA they'd be fine. 

Well, they'll have 18 months to transfer the 50% from a S&S ISA to a cash ISA if they want to. So a bit of minor hassle but hardly a disaster if they're reasonably aware of what's happening (which they should really be, if they're savvy enough to set up an investment structure like that).

wmb194

zagfles said:

wmb194 said:

Time2Go_25 said:

The following rules will be introduced to avoid circumvention of the lower limit for cash ISAs:

• no transfers from stocks and shares and Innovative Finance ISAs to cash ISAs
• tests to determine whether an investment is eligible to be held in a stocks and shares ISA or is ‘cash like’
• a charge on any interest paid on cash held in a stocks and shares or Innovative Finance ISA

These only apply to those under 65

The link to this: https://www.gov.uk/government/publications/tax-free-savings-newsletter-19/tax-free-savings-newsletter-19-november-2025

Be interesting to see whether gilts will be allowed - if not it'll be rough on those who've built a gilts ladder in an ISA. 

Also some people will have been feeding the full ISA allowance into a S&S ISA for years and maybe have structured it to say 50% "cash like" and 50% equities, and it seems they'll now be forced to either remove/sell the "cash like" element or pay tax on it. Whereas if they'd been investing half in a cash ISA and half in a pure equity S&S ISA they'd be fine. 

They really should allow existing ISAs to remain under current rules, they could easily do this by saying the new rules only apply to ISAs that have been contributed to from 2027. 

The pre-2014 Isa rules were that gilts and corporate bonds with at least 5 years to redemption were allowed.

If we're lucky we'll be allowed to keep anything that's newly disallowed and just restricted from buying additional.

MA260

Hopefully ISA's will remain flexible. If they are going to tax interest in S&S then people might as well move cash out of the ISA to an account with similar rate with no platform fees charged on it and move it back in when they want to use it or to keep the ISA money for future years

InvesterJones

'Cash-like' is going to be interesting. There are several funds which span the range from STMMF to blended short duration bonds (e.g. 50% cash, 50% bonds) - if they set a % cash for a fund to be considered cash then we'll all just pick funds a little bit less than that).

Swipe

I can see this being U-turned before it even happens. So you can't even keep up to £12K cash in a S&S ISA? They really are making this over complicated.

zagfles

Aretnap said:

zagfles said:

wmb194 said:

Time2Go_25 said:

The following rules will be introduced to avoid circumvention of the lower limit for cash ISAs:

• no transfers from stocks and shares and Innovative Finance ISAs to cash ISAs
• tests to determine whether an investment is eligible to be held in a stocks and shares ISA or is ‘cash like’
• a charge on any interest paid on cash held in a stocks and shares or Innovative Finance ISA

These only apply to those under 65

The link to this: https://www.gov.uk/government/publications/tax-free-savings-newsletter-19/tax-free-savings-newsletter-19-november-2025

Also some people will have been feeding the full ISA allowance into a S&S ISA for years and maybe have structured it to say 50% "cash like" and 50% equities, and it seems they'll now be forced to either remove/sell the "cash like" element or pay tax on it. Whereas if they'd been investing half in a cash ISA and half in a pure equity S&S ISA they'd be fine. 

Well, they'll have 18 months to transfer the 50% from a S&S ISA to a cash ISA if they want to. So a bit of minor hassle but hardly a disaster if they're reasonably aware of what's happening (which they should really be, if they're savvy enough to set up an investment structure like that).

Where would gilts, MMFs etc go?