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?

Indeed...and that's true post retirment as well, something my parents made me aware of from a reasonably early age with a cautionary tale about one of my great grandfathers. He grew a pretty succesful business in Hampshire, and sold out when he retired, quite young, in I think, the late 1940s. It was the equivalent of multiple millions today, and enough for a comfortable retirement in the large house they lived in on the outskirts of Winchester. He kept the cash in the bank, and government bonds. It was fine for a while. But the inflation from the very late '60s and though the '70s into the '80s meant than in 15 years the value of his savings fell by 80% in real terms.

Now, back then the government didn't issue index linked bonds, and investing in the stock market wasn't something you did unless you were very wealthy. Like some posters above, people like my great grandfather saw security in having cash in the bank. When he died the house was sold (but before the boom in house prices!!) and my great grandmother moved into an annex in my grandparents house becuse the money left had so little value, where she lived to be almost 100 but on a much reduced income!!

I don't really see the money going into growth of UK firms either. The reality is that the fund managers will use the money to buy shares/units from other fund managers or existing shareholders of firms etc., so the "seller" will make money from an uplift in share price - i.e. more money for millionaires and billionaires. I can't see more than a fraction of the extra money actually going into new companies or existing companies to be used for growth etc.

Yes, but the amount will be reduced down from 20k to push people to invest in S&Ss where they could lose money if they invest, or be taxed if they don't.

That is the thing I'm unhappy about.

As a previous poster said many people don't want to risk losing money they have saved for retirement on S&Ss.

What happens if you invest your retirement savings in S&Ss and lose it? Will the tax payer pick up the bill?

This seems like the sensible closing of a loophole to prevent people using their equity ISA as another cash ISA.

The risk of unintended consequences will be around how long people are allowed to hold cash that they genuinely intend to invest or re-invest. I'd imagine that's why it hasn't been done already.

I'm always surprised (but shouldn't be) by how a lot of posters are simultaneously angry at both ends of the candle though- like the OP who is annoyed budget cuts meant her post went, but also resents the taxation that funds those roles in the first place.

But why would anyone who understands finance use a S&S ISA as a cash ISA with a low interest rate on cash holdings, when they could simply open something like a Chase savings account and get 4.5%? Even if you paid tax on that interest it would beat the interest rates on cash held in a S&S ISA.
And yes, some of us do like to keep some cash ready for dips in the market, especially in volatile times; why shouldn’t we?

We should be simplifying savings and tax, not adding more convoluted rules!

2029 can’t come soon enough. What will be left of the economy by then is anyone’s guess.

First female chancellor and an absolute disaster.

They are quite happy to sit back and watch the capital eroded with inflation every year though, in the mistaken belief that what they have saved will be worth the same in 20 or 30 years time.
The whole point of investing is that you do it over a long period of time which means you ride out any dips. Nobody is suggesting that you just stick your entire life savings on the stock market in one go. You de-risk as you get closer to retirement but even during retirement it would be daft to keep it all as cash and allow it to lose value.

I’ve been around long enough to see every party get their turn, even the Lib Dems and yet I’ve never seen a dumpster fire as bad as this lot. Bring back Blair for god sake. I’d even take Gordon Brown.

I imagine its a pre-emptive measure to stop the platforms and providers from launching a range of new high interest cash products that sit within an S&S ISA to allow people to continue to chuck £20k a year into a cash product...

Compound interest will help cash savings beat inflation though.
Also just because you invest in S&S over a long period doesn't mean you won't lose a lot of money !!!

Exactly. I invested ten grand around 4/5 months ago. That ten grand made money. Then lost a fair amount and now is back to making money. There is no way I’d risk my savings in a S&S ISA. People want to feel safe and investing doesn’t feel safe. There’s literally T&Cs that say you can lose your money when you sign up.

There shouldn't be any

Stocks and shares are a long term investment, years not months. Yes you get dips, that is why you are advised to have a mixed portfolio, in the long term stocks and shares will out perform cash investment. Anyway for most people it's irrelevant as they don't have £12k to invest a year let alone £20K. 39% of UK adults have less than £1k in savings, I don't think they will give a fuck that you may have to pay a bit more tax, because you don't understand the way investment works.

But the entire point of a S&S ISA is that it is intended to be long-term savings. 4/5 months ago is definitely not long-term. You need to be thinking of investing for at least 5 years. I've had mine for over 25 years and over that time it has outstripped my cash ISA several times over in terms of returns.

She’s not interested in wanting us to invest more. She knows that Brits in general are risk averse and prefer to put money into savings accounts. It’s just an easy way for her to squeeze the savers because she won’t cut enough on spending.

I wonder if her next task is coming for tax on Premium Bonds prizes.

You can leave any money currently in a cash ISA there, and you can add £12k per year to your cash ISA in future years. If you’re not comfortable with the risk of a S&S ISA then there are other cash savings accounts that you can use for anything beyond £12k. You just need to pay tax on the interest, which gets worked out automatically if you’re PAYE like me. This has always been the case for any savings beyond the ISA limit. I have a combination of fixed term and instant access cash savings accounts for savings that can’t be covered by my ISA allowance.

I’ve maxed out my ISA allowance for the last few years and really can’t bring myself to feel hard done by because I can now only add £12k each year to the cash ISA account tax free. I earn thousands in interest tax free each year and that interest then goes on to earn me more tax free interest. Anyone in as privileged a position as I am has no right expecting anyone to get out the violins because a tax break they have benefitted from has got a bit less generous.

I can’t believe how incredibly tone deaf some of the posts are on here.

The easiest cut to make is "the triple lock" and the WFA, but heaven forbid that pensioners on £50k a year may have to have one less holiday a year. People are risk adverse because they don't have much to save in the first place. If all you've got is a couple of thousand, you're one car repair or boiler replacement from being totally broke, so losing say 10% is a big deal, with £500k invested lose 10% because of a market crash, you shrug, because you know it will recover and you can still afford that bottle of bolly on Friday.

Exactly. People don’t like to hear it though.

I find it interesting that the same people who claimed they would “freeze” on £35k a year without the WFA are the same ones who don’t want to acknowledge the situation for working Brits where the average wage is about that much.

The vast majority of savers aren’t in your comfortable position @Takoneko so no idea why you think some people are being tone deaf.

Anyone whining about this is putting over £12k per year into savings. If they’ve been doing that for any significant length of time then they have a lot of savings by any normal metric.

Acting like this is some grabby tax raid on the ordinary rainy day saver is embarrassing. If you’re going to be affected by this, then you’re in a position to be able to afford to pay a bit more tax.

I can afford to pay the potential tax, but I already pay enough so I’m fucked if I’ll be paying more so I will look to anyways to lawfully avoid paying tax, as I currently do. PB’s being one thing and I’ll probably top up my cash ISA before April. I also have no interest in risking my amount of savings. So yes this is a very grabby tax raid - and a predictable one - but like I said, it’s easy for her. I don’t have much respect for her, if any at all.

Maybe because they live in some Victorian Manse with a hole in the roof and rattling windows, that they can't afford to repair, but they can't possibly move somewhere more suitable "because it's their children's inheritance", despite the fact the first thing the children will do is sell the damp-ridden hovel. Note I'm a pensioner and the year there was no WFA I didn't really notice, but obviously if somebody is going to give me free money I'm going to accept.

I think the “I will take what I can get back” because they screwed me for so many taxes etc, is a relatively recent phenomenon. I actually think my grandmother’s generation (she would have been 106 this year) was far more embarrassed to just take. They appreciated the value of free services with deep respect etc. none of it was taken for granted either.

As you’re perfectly entitled to. I also take full advantage of all the tax free wrappers available to me for my savings. But this isn’t new tax. It’s a tax break for the privileged (whether you accept that you are or not) becoming a bit less generous.

Thatcher's children. "There is no such thing as society". the only thing important is self.