Guidance

Tax-free savings newsletter 22 — June 2026

Published 24 June 2026

Reform of Individual Savings Account (ISA) rules

At Autumn Budget 2025 the government announced it was reforming ISAs as part of its wider strategy to develop a retail investment culture.

Tax-free savings newsletter 19 provided an overview of the Budget announcement and pointed to the need for new rules to prevent circumvention of the lower cash ISA limit.

These rules are designed to ensure the policy achieves its objective of encouraging retail investment to support better returns for savers by minimising the opportunity for the lower cash ISA limit to be circumvented, while preserving the flexibility needed for legitimate saving and investment behaviours within non-cash ISAs.

The final package reflects extensive engagement with industry. The government has worked closely with providers, industry bodies and consumer representatives to design rules that minimise operational complexity and customer impact, while addressing the risks of circumvention.

The details of those rules are set out in this newsletter and this is a summary of key changes from 6 April 2027.

Charge on interest paid on cash held in a non-cash ISA

Any interest or alternative finance return paid or credited on cash held in Stocks and Shares and Innovative Finance ISAs (‘non-cash ISAs’) will be subject to a flat‑rate charge of 22% to discourage long‑term cash holdings.

100% cash‑like portfolios will be non-qualifying investments

Cash-like assets held as partial allocations will be permitted. A list of cash-like investments will be provided in legislation. Initially this will be limited to Money Market Funds. Wholly cash-like portfolios will be ineligible assets.

When identified, ISA managers will be expected to support investors to either:

• sell the asset and reinvest it within the ISA wrapper
• remove the asset from the ISA wrapper

Collection of data on Money Market Funds

ISA managers will need to report the market value of Money Market Fund investments across their ISA portfolio using the existing End of Year statistical return.

Transfer restriction

Transfers from non-cash ISAs into cash ISAs will not be permitted. It will remain possible to transfer from a cash ISA to a non-cash ISA.

Application to those aged 65 and over

Individuals aged 65 and over will benefit from a higher cash ISA limit of £20,000, entitlement to which will apply from the start of the tax year in which an individual turns 65. The transfer restriction will be disapplied from this point. The charge on interest earned on cash held in non-cash ISAs and the prohibition on 100% cash-like investments will remain in place.

What happens next

We will share draft legislation shortly for technical consultation ahead of the amending Regulations being laid in the Autumn for implementation on 6 April 2027. ISA guidance will be updated to reflect the changes to the Regulations.

HMRC will continue to engage closely with industry to support delivery of these changes and ensure the rules are implemented effectively.

First-time buyer ISA consultation

As announced at Budget 2025, the government has published a consultation on the implementation of a new, simpler ISA product to support first-time buyers to buy a home. The consultation will close at 11:59pm on 17 August 2026.

The consultation sets out the policy design of the new product and seeks views on technical elements, such as ISA manager requirements and how the product should interact with other ISA types.

Once available, this new product will be offered in place of the Lifetime ISA. However, it will remain possible to open a Lifetime ISA until the new product becomes available and for account holders to continue to save into their Lifetime ISA, in line with the existing rules.

The future of Help to Save

Following consultation and engagement with organisations across the financial sector — including banks, building societies and credit unions — the government confirmed in a tax update on 23 June 2026 that the reformed Help to Save scheme will be delivered through a multi-provider model.

This change will enable financial institutions to offer Help to Save accounts directly to eligible customers, improving access to the scheme, increasing visibility, and supporting higher take-up. The tax update announcement was accompanied by a summary of responses to the delivery consultation that took place after Autumn Budget 2024.

The move to a multi-provider model is expected to increase access and support wider participation, by allowing a broad range of financial institutions to offer Help to Save accounts.

HMRC will continue to work closely with stakeholders as further detail is developed. If your organisation is interested in offering Help to Save accounts and would like to be involved in our development work, please email: enquiries.savings@hmrc.gov.uk.

We would like to thank all organisations that contributed to the consultation process.