Draft ISA amendment regulations published for consultation

Draft legislation amending the Individual Savings Account Regulations 1998 was published on GOV.UK on 16 July 2026 by HM Revenue & Customs, as part of a consultation that has now closed¹. The regulations would come into force on 6 April 2027¹.

Regulation 6 introduces a £12,000 limit on subscriptions to cash ISA accounts for individuals under the age of 65¹. The draft text sets the rule as: "In any year in which a qualifying individual is 64 or under at the end of that year, the subscription limit in relation to a cash account is £12,000"¹. The existing overall subscription limit in regulation 4ZA(1) is unchanged, and the new cash limit sits alongside it¹. The amendment also changes the declarations an applicant must make when opening a cash account, and the rules for repairing excess subscriptions, to refer to both limits¹.

Regulation 16 inserts a new regulation 22A, which introduces a charge on interest or alternative finance return generated by cash deposits held within a stocks and shares ISA or an innovative finance ISA¹. Under the draft, the account manager must pay to the Board an amount representing income tax at the savings basic rate in force for the year on interest or alternative finance return paid or credited in that year¹. The amount is treated as tax due under an assessment that is final and conclusive and payable not later than six months after the end of the year in which the interest was paid or credited¹. No relief from tax applies to that interest, and no repayment of tax or amounts representing tax may be made to the account investor receiving or entitled to it¹. The explanatory note states that regulations 9 and 11 introduce new requirements when cash is held in a stocks and shares ISA or an innovative finance ISA¹.

The draft also changes the treatment of money market funds. Regulation 9 adds money market funds as a qualifying investment for a stocks and shares component, subject to a condition that 100% of the value of the investments other than cash must not be money market funds¹. Regulation 10 makes money market funds a qualifying investment for a cash component and omits the previous paragraph (q)¹. A money market fund is defined as one authorised under Article 4 or Article 5 of Regulation (EU) 2017/1131 of 14 June 2017¹.

Transfers are affected too. For a stocks and shares account or an innovative finance account, current year and previous years' subscriptions may be transferred to a stocks and shares account, an innovative finance account, a Lifetime ISA, or a cash account if the account investor is 65 or over at the end of the year¹. The draft also removes references to the age at which an account holder needs to be to open an account, which the explanatory note describes as obsolete¹.

Why it matters for households

The cash ISA subscription limit in the draft applies to a qualifying individual who is 64 or under at the end of the year, so the age reached at the end of the tax year determines whether the £12,000 cap applies¹. The change is drafted to take effect on 6 April 2027, the start of the 2027/28 tax year¹. Junior ISA accounts are excluded: regulation 4 amends regulation 2D so that the new regulation 22A does not apply to junior ISAs¹.

For anyone holding cash inside a stocks and shares ISA or an innovative finance ISA, the draft would make interest or alternative finance return on those deposits subject to a charge collected from the account manager at the savings basic rate, rather than being exempt¹. The charge would be payable not later than six months after the end of the year in which the interest was paid or credited, and the account manager would report the sums and the tax payable in its annual returns¹. The draft also provides that any amount due under regulation 22A that has not been paid at the date of a transfer is among the amounts to be dealt with on transfer¹.

The money market fund changes affect what can be held within a stocks and shares ISA and a cash ISA, with the condition that not all non-cash investments in a stocks and shares component may be money market funds¹.

What happens next

The consultation page is marked closed¹. The regulations are drafted to come into force on 6 April 2027¹. A Tax Information and Impact Note covering the instrument will be published on GOV.UK, according to the explanatory note¹. No date for that publication is given in the draft legislation¹.