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Draft legislation (accessible version)

Published 16 July 2026

Citation and commencement

1. 1 These Regulations may be cited as the Individual Savings Account (Amendment No. X) Regulations 2026 and come into force on 6 April 2027.

Amendment of the Individual Savings Account Regulations 1998

1. 2 The Individual Savings Account Regulations 1998 are amended in accordance with these Regulations.

Amendment of regulation 2

1. 3 In regulation 2 (interpretation), in paragraph (1), in sub-paragraph (b), insert at the appropriate place—
   1. “alternative finance return” means a return paid by a financial institution in accordance with Part 10A of ITA 2007;
   2. “money market fund” means a money market fund authorised under Article 4 or Article 5 of Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on Money Market Funds.

Amendment of regulation 2D

1. 4 In regulation 2D (regulations that do not apply to junior ISA accounts), after “21” insert “, 22A”.

Amendment of regulation 4

1. 5 In regulation 4 (general conditions for accounts and subscriptions to accounts), in paragraph (1B), in sub-paragraph (e), for “limit in regulation 4ZA(1)” substitute “limits in regulation 4ZA(1) and (1C)”.

Amendment of regulation 4ZA

1. 6 In regulation 4ZA (subscriptions to an account other than a junior ISA account)—
   1. (a) at the end of paragraph (1), insert “(but see paragraph (1C))”;
   2. (b) after paragraph (1B), insert—
      1. “(1C) In any year in which a qualifying individual is 64 or under at the end of that year, the subscription limit in relation to a cash account is £12,000.”

Amendment of regulation 4A

1. 7 In regulation 4A (repair of certain incompatible account and excess subscriptions—accounts other than junior ISA accounts)—
   1. (a) in paragraph (1A)—
      1. (i) after “because” insert “one or both of the”;
      2. (ii) for “limit” substitute “limits”;
      3. (iii) after “4ZA(1)” insert “and (1C)”;
   2. (b) in paragraph (3), in sub-paragraph (b)—
      1. (i) after “with the” insert “conditions of the”;
      2. (ii) for “limit” substitute “limits”;
      3. (iii) after “4ZA(1)” insert “or (1C), as the case may be”;
   3. (c) in paragraph (4), in sub-paragraph (a), in paragraph (ii), after “4ZA(1)” insert “or (1C), as the case may be”.

Amendment of regulation 5DDB

1. 8 In regulation 5DDB (flexible account), at the end of paragraph (3A), insert “and, where applicable, must not exceed the subscription limit in regulation 4ZA(1C)”.

Amendment of regulation 7

1. 9 In regulation 7 (qualifying investments for a stocks and shares component)—
   1. (a) in paragraph (2), at the end of sub-paragraph (j) insert “which an account manager holds for the purpose of investing in qualifying investments for a stocks and shares component or payment of account fees”;
   2. (b) in paragraph (2), after sub-paragraph (s) insert—
      1. “(t) subject to the conditions specified in paragraph (10A), money market funds.”;
   3. (c) after paragraph (10) insert—
      1. “(10A) The condition specified in this paragraph is that 100% of the value of the investments (other than cash) must not be money market funds.”

Amendment of regulation 8

1. 10 In regulation 8 (qualifying investments for a cash component), in paragraph (2)—
   1. (a) for paragraph (p) substitute—
      1. “(p) money market funds”;
   2. (b) omit paragraph (q).

Amendment of regulation 8A

1. 11 In regulation 8A (qualifying investments for an innovative finance component), in paragraph (2), in sub-paragraph (d), after “6(4) to (6)” insert “which an account manager holds for the purpose of investing in qualifying investments for an innovative finance component or payment of account fees”.

Amendment of regulation 10

1. 12 In regulation 10 (qualifying individuals who may invest under an account that is not a junior ISA account nor a Lifetime ISA), in paragraph (2), in sub-paragraph (ca)—
   1. (a) for “limit” substitute “limits”;
   2. (b) after “4ZA(1)” insert “and (1C)”.

Amendment of regulation 12

1. 13 In regulation 12 (conditions for application to open an account that is not a junior ISA account or a Lifetime ISA), in paragraph (3), after sub-paragraph (ea) insert—
   1. “(ec) that in the case of a cash account the applicant has not subscribed, and will not subscribe, more than the subscription limit in regulation 4ZA(1C)—
      1. (i) in the year to which paragraph (2) refers, and
      2. (ii) in each successive year following that year, in which the declaration has effect and the subscription limit in regulation 4ZA(1C) applies;”.

Amendment of regulation 21

1. 14 In regulation 21 (transfers relating accounts other than junior ISA accounts)—
   1. (a) in paragraph (4)—
      1. (i) at the beginning, for “The” substitute “In the case of a cash account, the”;
      2. (ii) omit “(if the account investor is 18 years of age or over)” in sub-paragraphs (a), (c) and (d);
   2. (b) after paragraph (4) insert—
      1. “(4ZA) In the case of a stocks and shares account or an innovative finance account, the current year’s subscriptions and the previous years’ subscriptions may be transferred to—
         1. (a) a stocks and shares account,
         2. (b) an innovative finance account,
         3. (c) a Lifetime ISA, or
         4. (d) a cash account (if the account investor is 65 or over at the end of the year) belonging to the same account investor.”;
   3. (c) in paragraph (4DA), in sub-paragraphs (e) and (f) omit “, a cash account”;
   4. (d) in paragraph (6), sub-paragraph (b)—
      1. (i) omit the “and” at the end of paragraph (iv);
      2. (ii) after sub-paragraph (v) insert—
         1. “(vii) any amount which is, or will become, due under regulation 22A which has not been paid to the Board at the date of the transfer;”.

Amendment of regulation 22

1. 15 In regulation 22 (exemption from tax of account income and gains), in paragraph (1)—
   1. (a) in sub-paragraph (a), paragraph (ia), omit “paid by a financial institution in accordance with Part 10A of ITA 2007”;
   2. (b) in sub-paragraph (e), omit “held under a cash component”.

Insertion of regulation 22A

1. 16 After regulation 22 insert—

   1. “Interest or alternative finance return on cash deposits held under a stocks and shares component or innovative finance component

   2. 22A.—(1) When in any year, a sum of interest or alternative finance return is paid or credited in respect of a cash deposit which is held under a stocks and shares component or innovative finance component in accordance with regulation 6(4) to (6)—
      1. (a) no relief from tax applies to such interest or alternative finance return, but
      2. (b) paragraph (2) applies, and the amount determined in accordance with that paragraph represents the tax on such interest in place of the liabilities to tax which would otherwise arise.
   3. (2) Where this paragraph applies—
      1. (a) the account manager must pay to the Board an amount representing income tax at the savings basic rate in force for the year on all sums of interest or alternative finance return referred to in paragraph (1) paid or credited in that year; and
      2. (b) any amount so payable—
         1. (i) may be set-off against any repayment in respect of tax due under regulation 25, and
         2. (ii) is to be treated as an amount of tax due under an assessment which is final and conclusive and payable not later than 6 months after the end of the year in which the interest was paid or credited.

   4. (3) The interest or alternative finance return referred to in paragraph (1) in all other respects is to be regarded as if it were not income for any income tax purposes, and no repayment of tax or amounts representing tax may be made to the account investor receiving or entitled to such interest.

   5. (4) The reference to interest in paragraph (1), and in regulation 22, includes a reference to any bonus and to a dividend paid or credited in respect of a share account with a building society.”.

Amendment of regulation 24

1. 17 In regulation 24 (tax liabilities and reliefs—account manager to act on behalf of account investor), in paragraph (3)—
   1. (a) omit the “and” at the end of sub-paragraph (a);
   2. (b) after that sub-paragraph insert—
      1. “(aa) any sum representing income tax which is payable under regulation 22A on amounts of interest or alternative finance return paid or credited as mentioned in that regulation; and”.

Amendment of regulation 26

1. 18 In regulation 26 (repayments in respect of tax to account manager—annual returns and annual claims), in paragraph (2), after “all income” insert “, all sums of interest or alternative finance return referred to in regulation 22A(1), the total amount payable under regulation 22A(2)(a),”.

Amendment of regulation 31

1. 19 In regulation 31 (returns of information by account manager), in paragraph (4), sub-paragraph (a), after paragraph (viii) insert—
   1. “(ix) funds in a money market fund,
   2. (x) any sum representing income tax which is payable under regulation 22A on amounts of interest or alternative finance return paid or credited as mentioned in that regulation,”.

Explanatory note

These Regulations amend the Individual Savings Account Regulations 1998.

Regulation 6 introduces a £12,000 limit on subscriptions to cash ISA accounts for individuals under the age of 65.

Regulations 9 and 11 introduce new requirements when cash is held in a stocks and shares ISA or Innovative Finance ISA.

Regulation 16 inserts regulation 22A to introduce a charge on interest or alternative finance return generated by any of those cash deposits.

Regulation 9 also introduces a new requirement in relation to money market funds held in a stocks and shares ISA and the definition of money market funds has been updated (regulation 3).

These Regulations make the required consequential amendments to the subscription, transfer, tax liabilities and reporting provisions applying to ISA accounts as a result of these introductions and remove obsolete references regarding the age an account holder needs to be to open an account.

A Tax Information and Impact Note covering this instrument will be published on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.