New ISA Limits advice

mar7t1n

With ISAs switching back to a mixed cash/stock setup, here’s something I really wish I’d understood when I was younger:

If you can, always max out your ISA allowance.

Even if you don’t need it right now. Even if you’re not paying tax yet. Rules change, economies change, and one day you may find yourself paying far more tax than you should — simply because you didn’t use the shelter when it was available.

You might think you’ll “never have enough” for it to matter. But that mindset guarantees you won’t. Take the opportunity while it exists.

When ISAs launched in 1999 you could put £3k into cash and £4k into stocks. I did the cash, but I avoided the stocks because I didn’t understand them. Later I tried, markets dipped, I stopped… and that decision alone means I’ve missed out on around £65k of allowed contributions over 27 years. At a very modest 4% market return, that money would have more than doubled inside an ISA wrapper.

The new rules are genuinely a good thing. Use them. Your future self will thank you.

Alexland

mar7t1n said:

The new rules are genuinely a good thing. Use them. Your future self will thank you.

I don't understand your above logic in getting to this conclusion.

There is absolutely no advantage of the proposed ISA changes compared to current arrangements.

It's just bad news that people will be capped on their Cash ISA contributions, likely taxed on their S&S ISA cash balance, restricted on transferring between ISA types and prohibited from executing S&S investment strategies such as gradually de-risking into lower risk assets prior to withdrawal.

The changes are truly awful - nothing to celebrate.

kimwp

Alexland said:

mar7t1n said:

The new rules are genuinely a good thing. Use them. Your future self will thank you.

I don't understand your above logic in getting to this conclusion.

There is absolutely no advantage of the proposed ISA changes compared to current arrangements.

It's just bad news that people will be capped on their Cash ISA contributions, likely taxed on their S&S ISA cash balance, restricted on transferring between ISA types and prohibited from executing S&S investment strategies such as gradually de-risking into lower risk assets prior to withdrawal.

The changes are truly awful - nothing to celebrate.

I agree, the changes are introducing restrictions to cash ISAs, not a good thing.

And using an ISA is often a good thing, but not always the best thing- inside the £1000 personal savings allowance and starter allowance if applicable, a greater interest rate and therefore increase of wealth could be the obtained outside an ISA.

Alexland

kimwp said:

I agree, the changes are introducing restrictions to cash ISAs, not a good thing.

Most of the damage from this 'Cash ISA change' seems to be happening to S&S ISAs.

It's a total fail that the S&S ISAs they were trying to encourage are going to be less attractive.

kimwp

Alexland said:

kimwp said:

I agree, the changes are introducing restrictions to cash ISAs, not a good thing.

Most of the damage from this 'Cash ISA change' seems to be happening to S&S ISAs.

It's a total fail that the S&S ISAs they were trying to encourage are going to be less attractive.

How is it affecting s&s ISAs?

Alexland

kimwp said:

How is it affecting s&s ISAs?

A tax/penalty to pay on cash balance interest, a transfer restriction and worse of all is the cash-like restriction which will probably stop investors owning money market funds, short term bonds and more importantly executing their risk management strategies such as gradually reducing risk as they approach withdrawal.

https://forums.moneysavingexpert.com/discussion/6642890/hmrc-will-stop-cash-like-investments-in-s-s-isas

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."

gravel_2

Alexland said:

mar7t1n said:

The new rules are genuinely a good thing. Use them. Your future self will thank you.

I don't understand your above logic in getting to this conclusion.

There is absolutely no advantage of the proposed ISA changes compared to current arrangements.

It's just bad news that people will be capped on their Cash ISA contributions, likely taxed on their S&S ISA cash balance, restricted on transferring between ISA types and prohibited from executing S&S investment strategies such as gradually de-risking into lower risk assets prior to withdrawal.

The changes are truly awful - nothing to celebrate.

Think it's an AI generated post.

Alexland

gravel_2 said:

Think it's an AI generated post.

Me or the OP? I'm ok with anything that generates conversation on this topic if it increases awareness of what's really happening here as the bad stuff seems to be going under the radar and most media coverage seems to be taking it on face value that the cap on Cash ISAs is a good thing for encouraging S&S investment. As always the devil is in the detail.

kimwp

Alexland said:

kimwp said:

How is it affecting s&s ISAs?

A tax/penalty to pay on cash balance interest, a transfer restriction and worse of all is the cash-like restriction which will probably stop investors owning money market funds, short term bonds and more importantly executing their risk management strategies such as gradually reducing risk as they approach withdrawal.

https://forums.moneysavingexpert.com/discussion/6642890/hmrc-will-stop-cash-like-investments-in-s-s-isas

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."

I see what you mean- the headline is reduction on cash ISA allowance, but the restrictions on stocks and shares ISAs to enforce it will put people off them.

Alexland

kimwp said:
I see what you mean- the headline is reduction on cash ISA allowance, but the restrictions on stocks and shares ISAs to enforce it will put people off them.

Yup while I still think S&S ISAs are clearly worth doing in the right circumstances they are less attractive and some people might get put off completely. Some people might get worse investment outcomes if they are not allowed (or penalised for) gradually derisking and end up being invested in higher risk assets too long and then selling when they need the money during a crash.