Basic question re proposed 22% tax on Stocks and Shares ISA's

weezie7

I have some investments, which are managed, in Stocks and Shares ISA's. I am over 65. I believe the new propsed tax at 22% on the cash element, is for everyone, under and over 65. Is this right? I am finding mixed messages re this!

Also, how do I find out what is the 'cash' element of my ISA's, that the proposed tax will be on? I know there are various phrases - cash, cash-like assets, money market fund, etc.

I wish to know so I can make use of the most tax efficient way to keep my ISA, as I currently take a small income from it and don't want to add to my tax bill! (Which HMRC keep getting wrong!!)

friolento

If you have any "proper" investment (funds, shares), you are exempt of the 22% charge on any interest from cash or cash-like deposits. There is no 22% charge on the cash / cash-like deposits themselves, only on interest they might earn.

This proposed charge applies regardless of age of the account holder. But note that nothing has actually been finalised, so keep your eye on the final decisions due later this year.

Woodstok2000

There are not really enough details on the proposed tax at the moment, but it is clear that the new tax is on interest earned on the cash element (and not the cash element itself).

zagfles

AIUI the 22% tax is only on interest from cash held in a S&S ISA, not cash-like investments. It applies regardless of age. See

Tax-free savings newsletter 22 — June 2026 - GOV.UK

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82062404#Comment_82062404

I think the Daily Telegraph floated the idea that you could have just One Pound in investments, to avoid any tax on cash interest. So more rules revisions on the way.

I would not be totally surprised if a new Chancellor ditched the whole thing. A good idea in theory but the implementation is too messy.

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82062404#Comment_82062404

Where do you get that from? It seems the 22% charge on cash interest applies to everyone regardless.

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82062412#Comment_82062412

You don't avoid the tax on cash interest. You're both confusing two issues:

Tax is on interest earned on cash, applies to everyone regardless.

100% "cash like" is a non-qualifying investment, ie you can't hold 100% MM funds. So £1 in equities and the rest in MM funds seems to solve that problem.

dunstonh

Also, how do I find out what is the 'cash' element of my ISA's, that the proposed tax will be on? I know there are various phrases - cash, cash-like assets, money market fund, etc.

As the information currently stands, providing that you have risk-based investments in the portfolio, then it will only be platform cash that will be subject to taxation on the interest.

You say your investments are managed, so your advisor would be able to confirm this to you.

I wish to know so I can make use of the most tax efficient way to keep my ISA, as I currently take a small income from it and don't want to add to my tax bill! (Which HMRC keep getting wrong!!)

One of the main strategies for people taking a regular draw from ISAs is to hold a cash float. That cash float will be subject to tax on the interest it generates. So there may be some adjustments needed in the method, providing that the platform is able to do alternative methods. Some platforms that don't currently have that functionality are attempting to bring it in. Again, your advisor will be able to deal with that.

The tax on the interest within the platform will not go on your tax return. Based on current information, it will be paid directly by the platform to HMRC as it's a flat rate. Much the same as they used to prior to 2014, when interest was previously taxed within an ISA.

zagfles

The MSE article explains it quite well

https://www.moneysavingexpert.com/news/2026/06/cash-investment-isa-reforms/

Exodi

https://forums.moneysavingexpert.com/discussion/comment/82062412#Comment_82062412

Agreed- and with such an obvious loophole I agree with your sentiment that more rule changes are on the way.

To be fair to them, I can understand the issue:

If they were to set a rule (e.g. you can only hold up to 25% of your portfolio in cash), not only does it disproportionally affect pensioners in drawdown who keep cash floats, but you could also cause situations where one persons portfolio which might have originally started with 80% equities and 20% cash, could quickly become 70% equities and 30% cash should their investments decline and they're not regularly re-balancing. You could well have this convoluted outcome where people are being charged tax on interest on days where equities are performing poorly and not being charged tax on interest on days where equities are performing well.

If they implement as currently suggested, that you just can't hold 'all' your money as cash (or cash equivalent) it's effectively a dead duck from the outset.

weezie7

Thank you for all the replies, I understand details are not yet finalised and who knows what will happen over the next few months! A bit for me to digest…….and will speak to my advisor about it too. Will update, when and if I hear anything new! Will also follow similar threads.