What are the impending ISA changes for people over 65?

In an effort to encourage Britons to invest more money, a number of changes are about to take effect However, how will these changes affect people 65 and older?

As the government works to promote an investment culture in the UK, investors will encounter significant changes to ISA regulations starting in April 2027.

Chancellor Rachel Reeves confirmed the reforms in the 2025 Autumn Budget, which will result in a new annual cash ISA cap of 12,000 for under-65s instead of the current 20,000 ISA allowance.

Lifetime ISAs, innovative finance ISAs, and the 20,000 annual ISA allowancewhich also covers stocks and shareswill continue to be available.

Retail investors will not be permitted to have a stocks and shares ISA composed entirely of money market funds, and a new 22 percent fee on cash held within stocks and shares ISAs will also apply.

Additionally, under-65s will not be permitted to move funds from stock and share ISAs into cash ISAs. Watch the full video here.

But it's more complicated how these new "anti-circumvention" regulations relate to people 65 and older.

What are the implications of the new ISA regulations for individuals 65 and older?

According to government guidelines, individuals 65 years of age and older will be subject to the 22 percent charge on interest earned on cash in an ISA for stocks and shares.

In the meantime, individuals 65 years of age and older will continue to be prohibited from investing in 100% cash-like funds (money market funds).

However, when the new regulations take effect in April 2027, people 65 and older will be able to move money from stocks and shares ISAs into cash ISAs, unlike people under 65.

The new regulations, according to Jason Hollands, managing director of wealth management firm Evelyn Partners, "undermine the tax-free promise" and add an unnecessary layer of complexity for all investors.

"We've never had different rules apply to different people depending on age," he continued."

When the new regulations take effect, individuals 65 years of age and older will be able to move money from stocks and shares ISAs into cash ISAs, which will allow them to free up more liquid cash and avoid paying tax on cash held within stocks and shares ISAs. Hollands applauded this development.

According to a representative for HM Treasury, "long-term cash parking in a non-cash ISA to earn tax-free interest isn't investing." Industry leaders like Nationwide and the Building Societies Association support our claims that these changes will encourage more people to make investments that genuinely increase their wealth.

"Those 65 and older retain the entire 20,000 allowance, and savers can still keep up to 12,000 in a cash ISA."

What is the specific application of the new anti-circumnavigation regulations?

Any interest paid on cash held in stocks and shares ISAs will be subject to the 22 percent fee.

Interactive Investor, AJ Bell, and Bestinvest are just a few of the investment platforms that offer interest on cash held in stocks and shares ISA.

Since interest will be paid to HMRC by investment brokers, individuals won't need to declare it.

As long as they don't account for 100% of the portfolio, cash-like assets like money market funds will be permitted within stocks and shares ISAs.

Under the new regulations, investments like shares, funds, investment trusts, ETFs, bonds, and gilts will not be regarded as cash-like assets.

Investors under 65 will be able to move funds from a cash ISA to a stocks and shares ISA, but not from stocks and shares ISAs. Investors who are 65 years of age or older are exempt from this rule.