Key Takeaways
- Interest, dividends and capital gains earned within an Individual Savings Account (ISA) are generally free from UK Income Tax, Dividend Tax and Capital Gains Tax (CGT)
- From 6 April 2027, the annual Cash ISA subscription limit is proposed to reduce to £12,000 for investors under age 65, while the overall adult ISA limit remains £20,000
- Investors aged 65 and over will retain a £20,000 Cash ISA limit from the start of the tax year in which they turn 65
- Anti-circumvention rules are expected to restrict transfers from Stocks & Shares ISAs and Innovative Finance ISAs into Cash ISAs for investors under age 65, introduce a 22% charge on interest paid on cash held in non-cash ISAs, and prevent non-cash ISA portfolios being made up entirely of money market funds
- The value of an ISA at the date of death forms part of the deceased investor’s estate for IHT purposes, although Additional Permitted Subscription (APS) rules may allow a surviving spouse or civil partner to preserve the ISA wrapper
