With a major change to ISAs due, savers and advisers have been nervously awaiting the final details, and they are, as widely feared, beset with complexity and a 22% tax trap.

From 6 April 2027, the government will slash the Cash ISA allowance to £12,000 from the current tax free £20,000, except for over 65s who will still have the old allowance from their 65th birthday.

The big change from next year is the decision to maintain the limit for stocks and shares and Innovative Finances ISA (non cash ISAs) at £20,000 to encourage retail investors to use them, but the Treasury does not want money held in these accounts simply as a tax wrapper and not being invested.

Now HMRC has confirmed the new rules, albeit no draft legislation yet, with the introduction of a ‘three core anti-circumvention rules’, in other words to prevent any potential tax avoidance opportunities.

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