The UK government’s proposal to impose a 22% tax charge on cash interest held within stocks and shares Individual Savings Accounts (ISAs) has triggered sharp criticism from wealth managers, banks, and consumer advocacy groups.
The plan, attributed to Chancellor Rachel Reeves, aims to close a perceived loophole but risks complicating a product long marketed as a simple, tax-efficient savings vehicle.
Industry experts argue that the move fundamentally alters the value proposition of stocks and shares ISAs.
By taxing the interest earned on cash components within these accounts, the Treasury is effectively eroding the tax-free shield that attracts retail investors.
Critics warn that the change could deter savings, particularly among those who use ISAs for liquidity management alongside long-term equity investments.
The backlash highlights a broader tension between fiscal consolidation efforts and the preservation of retail savings incentives.