ISA reforms from April 2027: proposed changes affecting cash and Money Market Funds
ISA reforms: preparing for 6 April 2027
The Government has published ISA reforms which will take effect from 6 April 2027. These reforms include a lower annual Cash ISA subscription limit for people under 65, together with measures affecting cash and Money Market Funds held in Stocks and Shares and other non-cash ISAs. Aberdeen does not offer Cash ISAs to new clients, however the wider changes are relevant to advisers and clients using our Stocks and Shares ISA products. The overall annual ISA subscription limit will remain at £20,000. The rules are not yet final and may change before implementation. Final guidance is expected to be published in Autumn 2026.
What is changing?
| Change | What it means |
|---|---|
| Cash ISA Limit | The annual Cash ISA subscription limit will be £12,000 for individuals aged under 65. The £20,000 limit will continue to apply from the start of the tax year in which an individual turns 65. |
| Overall ISA limit | The overall annual ISA subscription limit remains at £20,000. |
| Cash in a non-cash ISA | A flat-rate charge of 22% to interest or alternative finance returns paid on cash held in a Stocks and Shares ISA or Innovative Finance ISA. The ISA manager will deduct and pay the charge to HMRC. |
| Tax allowances | The Personal Allowance and Personal Savings Allowance will not reduce or remove the 22% charge, and clients will not need to declare this ISA interest to HMRC. |
| Money Market Funds | The regulations also introduce a rule to stop Stocks and Shares ISA investments from consisting entirely of money market funds. They could continue to form part of a diversified non-cash ISA portfolio, but if an account only holds Money Market Funds, those funds will be considered non- qualifying investments. |
| ISA transfers |
Transfers from non-cash ISAs into Cash ISAs will not be permitted for those subject to the lower Cash ISA limit. Transfers from Cash ISAs to non-cash ISAs will continue to be allowed. The transfer restriction will be disapplied from the tax year in which an individual turns 65. |
Important distinction: the 22% charge will apply to interest paid on cash held in a non-cash ISA. It will not apply to returns from Money Market Funds. The separate proposed Money Market Fund rule concerns an ISA invested wholly in cash-like investments.
What should advisers consider now?
- Review how much cash clients hold in Stocks and Shares ISAs and why it is held, including cash retained for charges, withdrawals, income payments, pending investment, or short-term transactions.
- Identify clients whose Stocks and Shares ISA is invested wholly, or could become invested wholly, in Money Market Funds.
- Review model portfolios and operational processes that may create a 100% Money Market Fund position, including switches, rebalancing, withdrawals, and automated disinvestment.
- Consider whether the selected auto-disinvestment strategy remains appropriate. Charges can be met from available cash or through auto-disinvestment, and the existing charging hierarchy may use platform cash or another product before the ISA.
- Explain to clients that keeping cash within a Stocks and Shares ISA will remain possible, but interest paid on that cash will be reduced by the 22% charge from 6 April 2027.
What is Aberdeen doing?
We are working through the detailed end-to-end changes needed across our platforms, including the deduction and reporting of the charge, identification of Money Market Funds, monitoring, warnings, adviser and customer communications and the interaction with existing cash management and auto-disinvestment processes.
We are planning on the basis of the draft rules and will make the mandatory changes required for 6 April 2027 if they are finalised as proposed.
We will update this page as further implementation detail is confirmed and will communicate any actions advisers or affected clients need to take before the new rules apply.