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?

Not a bad idea. Giving tax advantages to keep money in cash never made much sense. But mildly annoying to see it being done in this way rather than combining the two ISA types / ISA holdings into one. I guess it's to avoid the bad headlines that 'abolishing' an ISA type would bring.

I think a lot of the "wrong" message re tax was during Gordon Brown's tenure when first he removed "tax credits" and "advance corporation tax" from dividends, then massively extended tax-free savings with ISAs, and the, firstly, reduced 10% income tax rate, plus a whole host of other "tax efficient" investments. It all sent a clear signal that tax saving/tax avoidance wasn't just normal, it was something to be encouraged. Then later on, we've got interest tax free allowances, dividend tax free allowances, the extra personal savings allowance against another £5k of interest etc. The whole thing has sent a strong message that there are loads of ways to avoid tax on savings and investments. So we've ended up with the "tax tail" wagging the dog, i.e. people making decisions based around not paying tax rather than what is actually beneficial for them and the country.

The idea is good, i.e. to encourage saving, but it doesn't hit the right people. The ones with money were already saving/investing and didn't need the tax breaks as they were doing it anyway. The ones who needed to be encouraged don't have the spare money to invest anyway, so the tax breaks are pointless.

We have to remember that up to around 25-30 years ago, interest was taxed at source at basic rate by the bank and dividends were subject to the tax credit/ACT, so basically, they were taxed before being paid to the account holder/investor, so they didn't "feel" the tax. When Brown stopped all that, people suddenly found themselves with a tax bill (if their dividends/interest were high enough), and that triggers human behaviour to do something about it!

Oh I thought from the title that all savings were all going to be taxed including ISAs.

Taxing people to prevent them just holding cash in what is supposed to be an S and S ISA doesn't bother me though. I didn't even know it was possible tbh. Put it in a cash ISA if you want a cash ISA.

Where in my post did I say I thought anybodies council tax would reduce? Please read my post again

Sorry, another one who wants to pay more tax. Apologies.

I will retreat now from the discussion now because I dislike your tone. Please don't bother to reply as I will not be reading any further posts.

Pretty much what I was saying upthread; it’s going to over complicate what should be a simple savings scheme and shows a lack of understanding of investing, all to squeeze a very small sum from an ever smaller number of taxpayers.

"The Isa reforms will make Isas much more difficult to grasp. The tax wrapper is hugely popular and millions of savers have one. The biggest draw is its simplicity. Adding new age-based contribution limits, stricter rules around what you can have in a wrapper without having to pay tax, and the added administrative burden that comes with working this out will make Isas much more complicated.
The result? The chances are that the very people you want to encourage to take out an Isa won’t bother. This is yet another case of how an action intended to do one thing can result in the exact opposite."

https://www.thetimes.com/article/b05160b4-c910-4366-b19f-d7d81b8c5608?shareToken=3b362cb1cb85a60ce7a0a336234276fa