Hold onto your hats, rumours swirling that Rachel Reeves is looking into ANOTHER tax and if you have savings .. she might be coming for you.

[EvangelicalAboutButteredToast]

Yep, it’s another Labour tax! I know everyone felt very positive about the last one I posted: proposed tourist tax to make your staycations potentially more expensive on top of her also targeting holidays abroad by increasing air passenger duty plans to charge 20 per cent VAT on the fees airports charge airlines for using runways and terminals which will of course be passed onto customers.

Now for the savers.

Rumours are circulating that Chancellor of the Exchequer Rachel Reeves is planning to impose a new 22% charge on interest earned from cash held in a Stocks and Shares ISA from April 2027.
While nothing has been confirmed yet, here’s what could change and what it could mean for you.
What is the proposed 22% charge on cash in a Stocks and Shares ISA?
Currently, any cash you hold inside a Stocks and Shares ISA, whether that’s uninvested money sitting on the side or interest earned from cash-like products, is completely tax-free.
But now that could be about to change.
Reeves is reportedly planning to impose a 22% tax charge on any interest earned from cash held inside a Stocks and Shares ISA, starting from April 2027.
Following the Cash ISA allowance cut from April 2027, announced in the 2025 Autumn Budget, the government wants to stop savvy savers from parking their cash inside a Stocks and Shares ISA to dodge the new Cash ISA limits (more on those below).
However, this isn’t entirely new ground.
Before 2014, a 20% charge applied to cash interest inside Stocks and Shares ISAs. The new proposal would bring that back — only this time at 22%, in line with the incoming savings interest tax rate change from April 2027.
Why is Rachel Reeves changing the ISA rules?
The government thinks the UK general public saves too much and invests too little.
Compared to other G7 nations, British households have historically kept a much larger portion of their money in cash savings rather than putting it to work in the stock market.
Reeves wants to change that and turn us into a nation of investors, rather than savers.
And she’s hoping that with more retail investors, it will mean more money flowing into UK businesses, driving growth and boosting tax receipts.

https://blog.investengine.com/rachel-reeves-tax-cash-in-stocks-and-shares-isa/

Was also being discussed on LBC This morning. Everyone still happy?

Why? Why don’t you think you should pay tax on unearned income in the form of interest? I presume you want your state pension? NHS treatment?

We've paid loads of tax on earned and unearned income. ISAs are supposed to be tax free though. That is their purpose, a tax free savings wrapper.

How long will one be able to hold it in cash for ?my DD has cash sitting on her stocks ISA for np other reason that to wait for a big dip to then invest ?

There surely is a time limit that money sitting as cash can sit for at least 6 months or a year ??

@IsthataNo You can hold it in cash as long as you like, you”ll just be charged tax on any interest that you earn on cash.

Another screeching u-turn?

https://www.telegraph.co.uk/money/investing/isas/treasury-delays-isa-tax-rules/

“The Treasury has delayed publishing its long-awaited Isa rules after The Telegraph revealed its plans could be undermined by a simple loophole.
In last year’s Budget, Rachel Reeves, the Chancellor, announced plans to cut the current cash Isa allowance from £20,000 to £12,000 for under-65s. The stocks and shares Isa limit will remain unchanged, but a 22pc tax on interest earned on cashheld in these products is set to be levied.
The details of how the policy would work were expected to be published imminently but have now been delayed, sources said.
It comes after The Telegraph revealed a flaw in the policy that would have allowed savers to dodge Ms Reeves’s crackdown on cash.”

@Hopefulsalmon , in theory but I very much doubt the majority of money in these accounts is held by people exploiting a loophole. We occasionally have money like this when it’s been a good time to sell some shares but not the right time to reinvest. This will reduce by 22% funds available to reinvest and therefore support businesses. It’s taxation madness dressed up to appeal to those who don’t invest and so don’t understand. The treasury will win short term but because business will lose so will the treasury long term. It’s a sticking plaster.

Honestly, this whole exchange shows how confused people are about tax.

• Rich people won't be paying this tax. It's essentially just a way of making the cash ISA decrease effective.
• The only people who will end up paying it in practice are those who don't stay on top of their finances, eg forget to reinvest their dividends. So not anyone financially sophisticated or with an advisor.
• In any event, billionaires are not fretting about whether they have £20k or £12k allowance for their cash ISA.
• There are only about 150 billionaires in the UK. Even if every one of them went mad and decided to open a S&S ISA, put £20k in it but leave it in cash, the total tax raised would be about £25k 😂

Indeed. Barely any at all - it’s just in a savings account. So hardly a catastrophe. Perhaps tax from interest on a few £000, so perhaps about £20.

The 22% will only be on the interest - not the cash sum

No, you are not understanding it. The proposal is just for money held as uninvested cash within S&S ISA. It is to stop people sticking 20k in and never investing it. Just leaving it sitting as cash earning interest.

OK so basically if you currently have a stocks and shares ISA and use it for both cash investment and shares, because it is easier to have it in one place.

From 2027, you essentially transfer out how ever much you want into a new Cash ISA and keep it there. And then every year if you have your full £20 k allowance you decide how to allocate it between both ISAS.

Just sounds like extra admin and hassle.

The best way to save for retirement is by investing though. Keeping your retirement savings as cash is just daft and you would eroded the value by the time you got to retirement if you did that.

People have enough to worry about at the moment without things that may never happen…!

There are always rumours swirling of one thing or another. Best to deal with facts.

And the tax incentives for saving into a pension are pretty good too!

No one my age has an expectations that pensions will even exist and the pension age rises and rises every few years.

Anyway, I bet if this happens every single platform like Hargreaves Lansdowne will be offering a second sitting cash ISA and tell people exactly what to do.

However, disincentivisng people to get out of a stock market crash quickly to park your cash temporarily is really not on. And all for what. People split their cash and shares into two products.

Sounds like another shambolic pointless thing to do.

People need to decide for themselves how they want to save and invest, based on their own risk profile. It is not something Reeves should be interfering with to this level. Statements made to encourage people to invest in UK government bonds if they can and UK smaller listed companies - yes. Full on incentivising people to do it, who may then lose cash they cannot afford to lose for retirement, with the tax payer picking it up potentially, bad bad idea.

It was literally being talked about this morning on the radio and is already being written about in publications. It will happen as will the myriad of other taxes they are bringing in.

They still are and will be if this goes ahead. They are tax free under the rules. Only 12k will be allowed per year as cash. If people choose to then stick 8K into a S&S ISA and leave it uninvested then yes, they should pay tax on any interest.

What a load of speculative nonsense. Obviously it's half term and the temperature for some is unseasonably high. Cool down!

You are not a bot but you do post regularly so you show your true colours. Try harder.

Thats really not the best way to approach investing.

Agree @placemats !

I don't think this tax is really relevant to billionaires. Besides, there aren't many billionaires in the UK.

Exactly, this is just closing a loophole that appeared due to her changing the rules last year. It's a complete non-story. If people want to save tax free in cash ISA, then they can invest in a cash ISA rather than try to screw the system by investing cash in a stocks & shares ISA.

They should have kept cash and S&S isa amounts the same. The joke here is that the interest you get in cash held in a S&S isa wrapper is usually very low. Secondly I assume she’s going to make each platform responsible for calculating this however it will be up to taxpayers to declare it.

I think people should be aware that nothing is off limits with this bunch. They need to hero paying their voter base.

I don’t see how it’ll encouragemore investment in the stock market , either. Rather the reverse!

But I can’t say I’m surprised that RR will be looking for ways to take money from those undeserving people who have any - the despised ‘rich’ - and either adding it to the already colossal benefits pot, or wasting it in some crackbrained govt. scheme for ‘improvement’ of something.