Yesterday Jason Hollands and Bestinvest posed a big question – as to whether HMRC would move against the ability to transfer Stocks & Shares ISAs to Cash ISAs.
And he also asked whether a tightening of the rules around holding cash within a Stocks & Shares ISA would be knock-on impacts from the Chancellor’s decision to reduce the amount than can be subscribed to Cash ISAs by people under 65s from April 2027.
Well, we’ve now had an update from Jason that there is an answer to that question. An HMRC bulletin has today outlined the intended measures:
- no transfers from stocks and shares and Innovative Finance ISAs to cash ISAs
- tests to determine whether an investment is eligible to be held in a stocks and shares ISA or is ‘cash like’
- a charge on any interest paid on cash held in a stocks and shares or Innovative Finance ISA
As Jason says: “While it is no surprise they are going to take action – as we predicted this – levying a charge on cash held within Stocks & Shares ISAs is yet another stealth tax that will impact genuine investors who sometimes decide to park money in cash for a period of time awaiting investment, or because they are nervous about the market environment.
“The ‘tests to determine whether eligible investments are ‘cash like’ will throw doubt about access to money market funds within Stocks & Shares ISAs and could even bring short-dated bonds into question. More uncertainty ahead.”
There is clearly a lot here for advisers to consider and to keep an eye on as things develop, given clients’ cash holdings in ISAs etc.
