ISA Cash Charge
Calculator — 2027 (22%)

It has been announced, but it is not yet law. At Autumn Budget 2025 and in a GOV.UK factsheet published 23 June 2026, the government said that from 6 April 2027 a flat 22% charge will apply to the interest paid on uninvested cash held within a Stocks & Shares ISA (and Innovative Finance ISA). It is a charge on the interest, not on the cash itself, and it does not touch Cash ISAs — interest in a Cash ISA stays tax-free. For the current 2026-27 tax year nothing has changed: cash sitting in a Stocks & Shares ISA still earns interest completely tax-free. The measure is still going through technical consultation on the draft legislation, so the 22% figure and the detail could change before it takes effect.

The announced rate is a flat 22% of the interest (or equivalent alternative-finance return) paid on uninvested cash inside a non-Cash ISA. On £10,000 of cash earning 4% (£400 of interest), a 22% charge is £88, leaving £312 of net interest — an effective net rate of about 3.12% instead of 4%. The charge scales with the interest, so the more cash you park and the higher the rate it earns, the larger the charge. It is levied on the ISA manager rather than on you directly, but providers are expected to pass the cost on through a lower net rate on cash, which is the effect this calculator shows.

Yes — with one condition. The government confirmed that money market funds (MMFs) held in an ISA are not treated as cash and are not liable to the 22% charge, as long as they do not make up 100% of the ISA. In other words, if your ISA holds at least one other qualifying investment — a standard fund, an individual share or a bond — you can hold money market funds alongside it without triggering the charge. MMFs typically track short-term interest rates closely, so for many investors they are the intended route to keep a cash-like, low-risk holding inside a Stocks & Shares ISA without the 22% charge. Confirm the fund qualifies and that your ISA is not 100% MMF before relying on this.

The announced start date is 6 April 2027, the beginning of the 2027-28 tax year. It does not apply to the current 2026-27 tax year, so cash in a Stocks & Shares ISA is still earning tax-free interest for now. The GOV.UK factsheet (23 June 2026) states that a technical consultation on the draft legislation is still to run and that regulations will be laid in the autumn to bring the change into force on 6 April 2027 — so until those regulations are in place it is an announced/proposed change, not current law, and could still be amended. Always confirm the position on gov.uk before acting.

Legally, the ISA manager (your provider) pays the charge to HMRC on the interest it credits to uninvested cash in a non-Cash ISA — it is not a charge you report or pay yourself. In practice, providers are widely expected to recover the cost by paying a lower net interest rate on cash held in Stocks & Shares ISAs, so the economic burden falls on savers who hold large cash balances there. That is why this calculator frames the result as the reduction in the net interest you would receive. How fully any individual provider passes the charge on is not guaranteed and may vary between platforms.

The charge only applies to uninvested cash in a non-Cash ISA, so the levers are: (1) invest the cash — into funds, shares or bonds — which was the government's intent; (2) hold a qualifying money market fund instead of raw cash (exempt, provided the ISA is not 100% MMF); (3) keep genuine cash savings in a Cash ISA, where interest stays tax-free, within the announced £12,000 under-65 Cash ISA limit from 2027 (£20,000 for over-65s); or (4) hold cash outside an ISA using your Personal Savings Allowance (£1,000 basic-rate, £500 higher-rate). Which is best depends on your goals, risk tolerance and tax band, and this is general information, not advice — speak to a regulated financial adviser.