The levy is to prevent savers from getting around new cash ISA limit rules, which will see the annual cash ISA limit cut from £20,000 to £12,000 for under-65s09:04, 24 Jun 2026A new charge is set to be introduced on interest earned from cash held in stocks and shares ISAs from next year.‌The levy is to prevent savers from getting around new cash ISA limit rules, which will see the annual cash ISA limit cut from £20,000 to £12,000 for under-65s from April 2027.‌The cash Isa allowance for people aged 65 and over will remain at £20,000.‌There will still be an overall £20,000 ISA limit for under-65s - which means savers could in theory put £12,000 into a cash ISA, and then the remaining £8,000 into another type of ISA.The Government says it is introducing the changes to encourage people to invest, with the limit on other ISAs such as stocks and shares ISAs and innovative finance ISAs remaining at £20,000.‌A factsheet newly published on the HMRC website has now confirmed that there will be a 22% levy on interest earned from cash held in stocks and shares ISAs.Savers will also not be allowed to hold 100% of their non-cash ISA portfolio in Money Market Funds, which are cash-like assets which invest in short-term debt securities.The new rules also prevent people from putting £20,000 to a non-cash ISA and then transferring those funds to a cash ISA.‌HMRC said a technical consultation with industry on the draft legislation will start shortly and regulations will be laid in the autumn.Simon Harrington, head of public affairs at Personal Investment Management and Financial Advice Association, said: “We remain sceptical that these changes will have any real effect on consumer investment behaviour and fear they will do the opposite.“Far from encouraging take up, they risk making the stocks and shares Isa, the very wrapper the Government wants people to use, less attractive.”‌Andrew Gall, head of savings at the Building Societies Association (BSA) said: “We welcome the Government providing greater clarity on its proposed Isa reforms.“It is vital that savers have clear information and sufficient time to understand how the changes will affect them and the choices available to them from April 2027.“Building societies also need certainty on the final rules so they can update systems and communicate with their members well ahead of implementation.”Article continues belowAndrew Prosser, head of Investments at InvestEngine, said: “Our worry is that instead of encouraging investing, this could end up putting people off.“If stocks and shares Isas become more complex and less straightforward, some savers may just disengage altogether – which would go against the whole point of trying to build a stronger investing culture in the first place.“What we really need is to improve financial education and make it more accessible – that would do far more to encourage people to invest than simply restricting how they use their savings and would be a more effective way of building a healthier investment culture in the UK.”