New £12,000 limit on Cash ISA

Sea_Shell

MK62 said:

Aretnap said:

zagfles said:

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?

MMFs could be sold and held as cash instead - and transferred to a cash ISA in the next 18 months. They're effectively cash anyway, which is why until this afternoon all the geniuses were telling us that they were going to get round the new rules by investing in money market funds within S&S ISAs.

Gilts, dunno, we'll have to see the finer detail on whether they can be held to maturity. Though if you have gilts with only a couple of years to run they're also effectively cash anyway at this point, so you might as well sell them and transfer to a cash ISA if that's your wont.

It seems to me that this will all get ridiculously complicated (and possibly blatantly unfair in some cases) for existing S&S ISAs........perhaps the cleanest solution would be to keep pre-2027 accounts as is, but mandate that from April 2027, all new contributions must go into a New Investment ISA (or whatever name seems appropriate), bar transfers from new to old, and implement any new investment restrictions only on the new style accounts. Transfers from old style accounts to new could be allowed if and when the old style account was made compliant with the new style account rules. (there is a sort of precedent for this when LISAs were introduced in place of Help-to-Buy ISAs).

Surely the government would not force people to sell investments which were compliant with the rules when purchased, but are suddenly no longer compliant with any new rules.......some could be looking at investment losses into the thousands.

Personally, I just want clarity on what will happen to my Trading 212 'uninvested' QMMF cash already held in the S&S ISA.

I'm really hoping they won't have to charge me a fee for holding it, and it would seem perverse, to make this holding's interest liable for tax retrospectively.

If I'm also not allowed to transfer this to cash, and keep its ISA status, then i'll have to spend it, or invest it.    But that won't be in UK only funds (sorry Rach), it'll be added to my already held global funds, with iWeb.

New money, OK, change the rules, but old money?   

masonic

Sea_Shell said:

MK62 said:

Aretnap said:

zagfles said:

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?

MMFs could be sold and held as cash instead - and transferred to a cash ISA in the next 18 months. They're effectively cash anyway, which is why until this afternoon all the geniuses were telling us that they were going to get round the new rules by investing in money market funds within S&S ISAs.

Gilts, dunno, we'll have to see the finer detail on whether they can be held to maturity. Though if you have gilts with only a couple of years to run they're also effectively cash anyway at this point, so you might as well sell them and transfer to a cash ISA if that's your wont.

It seems to me that this will all get ridiculously complicated (and possibly blatantly unfair in some cases) for existing S&S ISAs........perhaps the cleanest solution would be to keep pre-2027 accounts as is, but mandate that from April 2027, all new contributions must go into a New Investment ISA (or whatever name seems appropriate), bar transfers from new to old, and implement any new investment restrictions only on the new style accounts. Transfers from old style accounts to new could be allowed if and when the old style account was made compliant with the new style account rules. (there is a sort of precedent for this when LISAs were introduced in place of Help-to-Buy ISAs).

Surely the government would not force people to sell investments which were compliant with the rules when purchased, but are suddenly no longer compliant with any new rules.......some could be looking at investment losses into the thousands.

Personally, I just want clarity on what will happen to my Trading 212 'uninvested' QMMF cash already held in the S&S ISA.
I'm really hoping they won't have to charge me a fee for holding it, and it would seem perverse, to make this holding's interest liable for tax retrospectively.
If I'm also not allowed to transfer this to cash, and keep its ISA status, then i'll have to spend it, or invest it.    But that won't be in UK only funds (sorry Rach), it'll be added to my already held global funds, with iWeb.
New money, OK, change the rules, but old money?   

According to the rules going into the consultation process, they would no longer be able to offer QMMF interest in the S&S ISA. Whether that's a ban on new money flowing in or all money having to be removed is unclear, but it would undermine the whole offering. The QMMF would be an ineligible investment, so under existing rules that would mean it would have to be sold or removed from the ISA wrapper upon disqualification.

Similarly, the block on all S&S to cash ISA transfers (rather than limiting to £12k per tax year), means they would be unable to offer a similar facility using ISA flexibility. That's prior to the consultation, so things may change. What they can do now (and up to the new rules coming in) is allow you to shift your cash-like investments to a cash ISA from which they'd be safe while they remained there.

Like I said upthread, this is your opportunity to write to T212 and voice your concerns so that they may challenge things during the consultation. Their arguments will carry more weight when backed by a volume of concerns raised by their clients. I have 5 different investment providers (though one is SIPP only), and once I've fully digested the proposals I intend to write to each of them.

wmb194

Rheumatoid said:

dont_use_vistaprint said:

I just read the following.

Guidance published on the HM Revenue and Customs (HMRC) website said rules will be introduced "to avoid circumvention of the lower limit for cash ISAs".

These rules are expected to include charges on interest earned on cash held within stocks and shares ISAs, as well as checks to determine whether money is being kept in "cash-like" accounts.

Where di you read this?

Repeating what's being written in other threads but a couple of days ago the intention prior to consultation was announced here:

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

"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 rules will apply to investors under the age of 65.

Industry will be consulted on the draft legislation, which will be made by amendments to the ISA regulations, and laid before Parliament well ahead of April 2027."

masonic

Requested a merge into this thread, where the most similar discussion is already taking place: https://forums.moneysavingexpert.com/discussion/6642761/new-12-000-limit-on-cash-isa

happybagger

Section62 said:

The new rules may also have the unintended consequence of driving some existing investors away from their S&S ISAs.  Not being able to transfer into (or hold) as cash may mean nervous investors (and/or those needing temporary access to cash) might sell up and transfer to a cash ISA while they still can, or simply not invest in the first place.

agree with this, for those that have retired or semi retired before 65, there could be an huge outflow transferring to cash ISAs before April 2027 knowing that they won't be permitted to do so until they reach 65

Section62

masonic said:

...

Like I said upthread, this is your opportunity to write to T212 and voice your concerns so that they may challenge things during the consultation. Their arguments will carry more weight when backed by a volume of concerns raised by their clients. I have 5 different investment providers (though one is SIPP only), and once I've fully digested the proposals I intend to write to each of them.

I wonder how effective this will be... given (IIRC) the whole thing was allegedly started by the 'investment industry' lobbying the government to reduce the cash ISA maximum annual subscription level as a way of nudging people into investing instead.

Presumably the experts at the investment providers considered for the need for anti-cash rules within S&S ISAs before lobbying for the change, and therefore also consider the additional complexity/hassle/reporting (plus the risk of cash-like outflow) to be less than what they hope to gain?

Are the providers now likely to challenge the very thing they supposedly asked for?

Aretnap

MK62 said:

Aretnap said:

zagfles said:

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?

MMFs could be sold and held as cash instead - and transferred to a cash ISA in the next 18 months. They're effectively cash anyway, which is why until this afternoon all the geniuses were telling us that they were going to get round the new rules by investing in money market funds within S&S ISAs.

Gilts, dunno, we'll have to see the finer detail on whether they can be held to maturity. Though if you have gilts with only a couple of years to run they're also effectively cash anyway at this point, so you might as well sell them and transfer to a cash ISA if that's your wont.

Surely the government would not force people to sell investments which were compliant with the rules when purchased, but are suddenly no longer compliant with any new rules.......some could be looking at investment losses into the thousands.

Well it would hardly be unprecedented. Investments lose their ISA eligibility all the time, eg when shares delist, or relist on the wrong stock exchange. Under current rules they have to be sold when this happens. 

Or maybe given the scale of the changes the government will offer a way of grandfathering existing holdings. We shall see. As Masonic suggests if you are concerned it would make sense to write to your provder who will surely be making similar points during the consultation. 

Investment losses of thousands strikes me as rather melodramatic though. The whole point of cash-equivalent investments is that they are, well, equivalent to cash. They do not fluctuate significantly in value over time and there is little gain or loss by converting to cash a little earlier than you planned. Eg if you have a Gilt that you were planning to hold to maturity in a years' time, the difference between doing that and selling it now and putting the proceeds in a one year fixed cash account is going to be basically a transaction fee plus a rounding error.

MisterMotivated

It's probably wishful thinking but, I would prefer if investment platforms could find a way/be allowed to offset interest on cash held in S&S ISAs against fees owed.  I generally only invest in global funds, but do keep a small amount in cash to cover the monthly fees.  It only earns me pennies each month, so I'd prefer slightly lower fees rather than having to tot up the interest from yet more accounts to add to my self assessment total.

MK62

Aretnap said:

MK62 said:

Aretnap said:

zagfles said:

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?

MMFs could be sold and held as cash instead - and transferred to a cash ISA in the next 18 months. They're effectively cash anyway, which is why until this afternoon all the geniuses were telling us that they were going to get round the new rules by investing in money market funds within S&S ISAs.

Gilts, dunno, we'll have to see the finer detail on whether they can be held to maturity. Though if you have gilts with only a couple of years to run they're also effectively cash anyway at this point, so you might as well sell them and transfer to a cash ISA if that's your wont.

Surely the government would not force people to sell investments which were compliant with the rules when purchased, but are suddenly no longer compliant with any new rules.......some could be looking at investment losses into the thousands.

Investment losses of thousands strikes me as rather melodramatic though. The whole point of cash-equivalent investments is that they are, well, equivalent to cash. They do not fluctuate significantly in value over time and there is little gain or loss by converting to cash a little earlier than you planned. Eg if you have a Gilt that you were planning to hold to maturity in a years' time, the difference between doing that and selling it now and putting the proceeds in a one year fixed cash account is going to be basically a transaction fee plus a rounding error.

.......but what about gilts maturing many years in the future.......if they are no longer permitted ISA investments after 2027, you are looking at either having to sell prior to that (at potentially a large loss), or perhaps, if allowed, moving them in-specie to a GIA (so exposing the coupons to tax.....the avoidance of which was the very reason they were put into an ISA in the first place)......it would be a textbook example of moving the goalposts.

masonic

Section62 said:

masonic said:

...

Like I said upthread, this is your opportunity to write to T212 and voice your concerns so that they may challenge things during the consultation. Their arguments will carry more weight when backed by a volume of concerns raised by their clients. I have 5 different investment providers (though one is SIPP only), and once I've fully digested the proposals I intend to write to each of them.

I wonder how effective this will be... given (IIRC) the whole thing was allegedly started by the 'investment industry' lobbying the government to reduce the cash ISA maximum annual subscription level as a way of nudging people into investing instead.

Presumably the experts at the investment providers considered for the need for anti-cash rules within S&S ISAs before lobbying for the change, and therefore also consider the additional complexity/hassle/reporting (plus the risk of cash-like outflow) to be less than what they hope to gain?

Are the providers now likely to challenge the very thing they supposedly asked for?

I've seen AJ Bell publicly speak out against the proposals in the past few days. It seems rather a defeatist attitude to assume they've written the consequences off as a sunk cost and will do nothing to seek to limit the damage the changes might have on them, depending how harsh the final rules will be.

I feel it is my duty to pre-warn one of my providers that I may need to pull a six figure portfolio from them if it turns out the rules are stricter than previous ones and that even >5 year gilts will not be eligible. I will then need to hold these unwrapped (which is not a huge problem for me from a tax perspective) and instead use my ISA wrapper to hold the cash I currently have sloshing around various taxable savings accounts.

Another provider stands to lose my SIPP account prematurely, because they don't offer gilts. I have just transferred to them for a cashback incentive and was planning to leave after the 18 month lock-in for the same reason, but this may force me to leave early so that I can avert the change above.

I'm in no rush to take action in a vacuum of information, but once the dust has settled and a bit more is known I will be seeking to make my feelings known to the providers I use. If I didn't do this small thing, then I'd have no right to grumble about the changes here, would I?