One of Surrey’s leading independent accountancy firms, TWP Accounting, is urging savers to take stock of their ISA strategy after the government confirmed plans that were previously dismissed as rumour.

Earlier this year, reports circulated that a 22 per cent tax would be introduced on interest earned on cash held within stocks and shares ISAs.

HMRC moved quickly to distance itself from those reports, with the Treasury describing them as “nonsense.”

However, the government has now formally confirmed that the measure will go ahead from April 2027.

The 22 per cent tax will apply to interest on cash savings held within a stocks and shares ISA wrapper – a practice that has until now been entirely tax-free.

The announcement forms part of a broader package of ISA reforms, which also includes a reduction in the cash ISA allowance for under-65s from £20,000 to £12,000 per year, a new first-time buyer ISA open to anyone over 18 and restrictions on the proportion of a stocks and shares ISA that can be held in money market funds.

Andrew Goddon, Tax Partner at TWP, said the reversal had compounded the confusion many savers were already experiencing.

“The original reports were dismissed so publicly that many people assumed the matter was settled,” said Andrew. “The confirmation that the 22 per cent tax is going ahead will come as a surprise to savers who took reassurance from those earlier denials.

“For anyone who has been holding cash within a stocks and shares ISA, whether as a short-term measure or as a way of managing risk, this changes the calculation significantly. That interest will no longer be sheltered from tax and savers need to consider whether their current approach still makes sense.

“The broader ISA reforms also require careful thought. The reduction in the cash ISA allowance affects how people under 65 structure their savings and the new first-time buyer ISA will be relevant for many clients who previously found the Lifetime ISA too restrictive.”

TWP Accounting and its financial planning arm, TWP Wealth Management, are working with clients across Surrey to review their ISA arrangements ahead of the April 2027 changes.

“The message is straightforward: don’t wait,” added Andrew. “The rules are changing in ways that will affect a significant number of savers and the time to plan is now, not next year.”

For guidance on your ISA and tax strategy, contact us.