Will I be taxed on my stocks and shares ISA?

Written by Darren Shepherd

35+ years in the UK mortgage industry

Last reviewed: 11 November 2026

Checked against current UK rules

Last reviewed and updated by Darren Shepherd, 11 November 2026

Back in June the headlines said the government was going to tax ISAs. I recorded the video above to explain what was really going on. Then the Budget on 28 October 2026 cancelled the whole thing. So if you watched the video, the background is still right, but the 22 per cent charge it talks about is not happening.

Here's where things stand now, starting with the basics.

First, what actually is an ISA?

An ISA, or Individual Savings Account, is a wrapper you put around your money. Whatever sits inside it is sheltered from UK tax. No tax on interest, no tax on dividends, and no capital gains tax when you sell investments at a profit.

You can pay in up to £20,000 across all your ISAs each tax year, which runs from 6 April to 5 April. Use it or lose it. Any allowance you don't use can't be carried forward.

Cash ISA vs stocks and shares ISA

The two main types do different jobs.

Same wrapper, different contents. You can split your £20,000 between the two however you like.

So will I be taxed on my stocks and shares ISA?

Not by the UK taxman. That was true before the headlines and it's still true now.

One thing that does still cost you money is charges. Platform fees and fund fees aren't tax, but they come out of your returns every year, and they vary a lot between providers.

What is changing in 2027?

Less than was planned. Here's what was on the table, and what the Budget on 28 October 2026 did with it.

• The cash ISA limit for under 65s was due to fall from £20,000 to £12,000 from April 2027. Cancelled. The cash ISA limit stays at £20,000 for everyone.
• A 22 per cent charge on interest earned by cash held in stocks and shares ISAs, from 6 April 2027. Cancelled. HMRC says the cash ISA cut "and associated anti circumvention rules" will not take effect, and the regulations will be revoked.
• The government says it will look at a new incentive for people opening a stocks and shares ISA for the first time. No details yet. It will be designed with the industry.
• A new First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029. Same £4,000 a year and 25 per cent bonus. Our Lifetime ISA guide covers what that means if you already have one.

The change that might matter more to you is outside ISAs. The Budget announced that tax on savings interest will go up by a further 2 percentage points from 6 April 2027, to 24 per cent for basic rate taxpayers, 44 per cent for higher rate and 49 per cent for additional rate. Those rates still have to go through the Finance Bill. Interest inside an ISA isn't touched by any of this.

Why was the charge planned, and why was it dropped?

Who actually needs to think about this?

• ✓You invest through a stocks and shares ISA. Nothing changes for you.
• ✓You only use a cash ISA. Your limit stays at £20,000, whatever your age.
• ✓You hold cash inside a stocks and shares ISA. The charge that would have hit this was cancelled.
• !You have savings outside an ISA. This is the group the Budget did affect. Most people can earn £1,000 of interest a year tax free as a basic rate taxpayer, or £500 as a higher rate taxpayer. Above that, the higher rates from April 2027 apply.

For someone paying basic rate tax, the Budget papers work out that you would need over £25,000 in savings outside ISAs before you paid any tax on the interest. That assumes an average rate of 4 per cent, so the real figure moves with interest rates.

What this means for you

If you hold a stocks and shares ISA, the headline you may remember from the summer no longer applies. Your money inside it stays sheltered from UK tax.

Whether you hold cash or investments, and how much of each, comes down to your own plans and how much risk you can take. That's a personal decision, and the free MoneyHelper service, or a regulated financial adviser, can help you think it through.

One honest caveat. ISA rules have moved around a lot in the last year. Treat anything you read about future tax rules, including this page, as the position on the date at the top.

The Short Version

• Stocks and shares ISAs stay free of UK income tax and capital gains tax.
• The planned 22 per cent charge on cash held in them was cancelled on 28 October 2026.
• The cash ISA limit stays at £20,000 for all ages.
• Tax on savings outside ISAs is due to rise from April 2027.

This article is general information and education only. It is not financial, tax, or investment advice, and it is not a personal recommendation. ISA and tax rules can change and depend on your individual circumstances. For advice on your own situation, speak to a regulated financial adviser, or visit the free and impartial MoneyHelper service backed by the government.