Dave Morris ISA

Does the wrapper actually save you anything?

Here is the counterweight, and it applies to more people than the industry likes to admit. The best easy access cash ISA on 8 September 2026 paid 4.61% AER, on Moneyfacts data. On a full £20,000 that is £922 of interest in a year.

What exactly is caught by the 22% charge?

The GOV.UK factsheet applies the charge to “any interest or alternative finance return” paid on cash held within a non-cash ISA, the umbrella term for stocks and shares ISAs and innovative finance ISAs. Alternative finance return is the Sharia-compliant equivalent of interest. The rate is flat at 22% for non-taxpayers, basic-rate and additional-rate taxpayers alike, with no allowance to set against it.

Which holdings inside a stocks and shares ISA escape the charge?

Everything that is actually an investment. The policy paper uses a separate concept, “cash-like assets”, and from April 2027 the only holding that counts as cash-like inside a non-cash ISA is a money market fund. The factsheet is explicit that short-dated gilts do not count as cash-like.

Why has the Treasury put a charge on cash in a stocks and shares ISA?

Because of the other half of the same reform. From April 2027 the annual cash ISA limit for anyone under 65 falls from £20,000 to £12,000. The overall ISA allowance stays at £20,000, so the remaining £8,000 can only go into a non-cash ISA. Without an anti-circumvention rule that cap would be trivial to sidestep: pay the extra £8,000 into a stocks and shares ISA and leave it as cash.

How does the one-way transfer valve work?

From April 2027 a saver under 65 can move money from a cash ISA into a stocks and shares ISA but cannot move it back. Transfers from a non-cash ISA into a cash ISA are prohibited for under-65s.