Over 65s won't be exempt from 22% tax on cash held in investment Isas

Will you be hit? Email: Lucy.evans@dailymail.co.uk See more This is Money on Google - save us as a Preferred SourceBy LUCY EVANS, MONEY REPORTER Updated: 11:10 BST, 26 June 2026

Over 65s who will retain their full £20,000 cash Isa allowance from April 2027 won't be exempt from a brutal new tax charge, it's been revealed.Investors aged over 65 will be clobbered with a punitive new 22 per cent levy on any interest they earn from cash in their investment Isa.The Treasury announced on Tuesday it will introduce this new tax for investors holding cash in these accounts from April 2027, which caused outrage among private investors.From 6 April 2027, savers under the age of 65 will be able to put a maximum of £12,000 into a cash Isa and if they want to invest the remainder (£8,000), they can put it into stocks and shares.Meanwhile anyone over 65 are retaining their £20,000 allowance as pensioners often favour safer cash over risky investments.The new tax charge has been blasted by industry leaders who have branded the rule 'draconian' and 'disappointing'. Investors over 65s have no reason to flout upcoming rules, but won't be exempt from taxThe Exchequer has confirmed the new charge announced earlier this week is designed to stop younger savers flouting impending Isa reforms.For example, someone under age 65 may place their remaining £8,000 Isa allowance into cash in an investment Isa, and reap the benefits with tax-free interest - although rates on investment platforms for keeping it in cash aren't nowhere near as generous as what's on offer at banks and building societies. However, even older investors with no cash Isa limit changes to dodge will not be exempt from this punitive charge.The charge will be applied as a blanket levy, no matter the age of the investor or their reason for holding it.Keeping some cash in a stocks and shares Isa is a vital function for older savers, who may want to derisk their portfolio by cashing in investments during times of high market volatility.These cautious investors cannot afford to take on as much risk as ones under 65, so they are more likely to gradually derisk by keeping some of their portfolio in cash.But this cautious thinking will now be targeted as the Treasury will soon pilfer a chunk of the interest earned.They will also be penalised for other legitimate reasons that investors hold cash in their stocks and shares Isas, such as paying fees, selling investments ahead of a big purchase, or receiving dividend income,However, these older savers can still hold as much as 99 per cent of their portfolio in cash-like investments – money market funds – if they want some exposure to low-risk investments, the one saving grace of the Treasury's plans.A Treasury spokesman says: 'Parking cash long term in a non-cash Isa to earn tax-free interest isn't investing. 'These changes will push more people towards investments that actually grow their money, and industry leaders including Nationwide and the Building Societies Association back us on this.'Savers can still hold up to £12,000 in a cash Isa, and those 65 and over keep the full £20,000 allowance.'Compare the best DIY investing platforms Investing online is simple, cheap and can be done from your computer, tablet or phone at a time and place that suits you.When it comes to choosing a DIY investing platform, stocks & shares Isa, self invested personal pension, or a general investing account, the range of options might seem overwhelming. > This is Money's full guide to the best investing platforms Every provider has a slightly different offering, charging more or less for trading or holding shares and giving access to a different range of stocks, funds and investment trusts. When weighing up the right one for you, it's important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.We highlight the main players in the table below but would advise doing your own research and considering the points in our full guide to the best investment accounts.Platforms featured below are independently selected by This is Money’s specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence. DIY INVESTING PLATFORMS Admin charge Charges notes Fund dealing Share, trust, ETF dealing Regular investing Dividend reinvestment AJ Bell* 0.25% Max £3.50 per month for shares, trusts, ETFs (£10 cap in Sipp). £1.50 £5 Free £1.50 per deal More details Bestinvest 0.40% (0.2% for ready made portfolios) Account fee cut to 0.2% for ready made investments. Free £4.95 Free for funds Free for income funds More details Charles Stanley Direct* 0.30% Min platform fee of £60, max of £600. £100 back in free trades per year. £4 £10 Free for funds n/a More details Etoro* Free Stocks, investment trusts and ETFs. Limited Isa, no Sipp.Not available Free n/a n/a More details Fidelity* 0.35% on funds £7.50 per month up to £25,000 or 0.35% with regular savings plan. Free £7.50 Free funds £1.50 shares, trusts ETFs £1.50 More details Freetrade* Free (paid plans give better rates and features)Stocks, funds, investment trusts and ETFs.Free Free n/a n/a More details Hargreaves Lansdown* 0.35% Capped at £150 annually for shares, trusts, ETFs in Isa £1.95 £6.95 Free Free More details Interactive Investor* £5.99 per month under £100k (Core); £14.99 above (Plus) Free monthly trade on Plus plan. £3.99 (Core); £1.49 (Plus) £3.99 Free £0.99 More details InvestEngineFree Only ETFs. Managed service is 0.25% Not availableFree Free Free More details Prosper* Free Refunded fees on 30 ETFs. No shares.Free Free Free Free More details Scottish Widows Free £5 £5 n/a 2%, max £5 More details Trading 212* Free Stocks, investment trusts and ETFs. Not available Free n/a Free More details Vanguard Only Vanguard's own products0.15% Only Vanguard fundsFree Free only Vanguard ETFs Free n/a More details (Source: ThisisMoney.co.uk June 2026. Admin % charge may be levied monthly or quarterly