Burnhams Tax on Cash ISAS and Death tax

I agree. They seem fair and useful.

Is the death tax instead of the current IHT or additional to?

We have been encouraged to save in ISA’s by successive governments.

Is the tax going to be on any profit (interest) received on the original investment or the entire amount? Will this be taxed if you close and/or withdraw from the ISA, or deductible from interest as it is added to the investment?

To be clear, the change from 6 April 2027 is that any interest paid on cash held in a Stocks and Shares ISA will be subject to 22% tax (excluding qualifying Money Market Funds). This is to deter people from trying to get around the new Cash ISA restrictions for under 65s by holding cash into their Stocks and Shares ISA instead.

I’d like to see the annual cash ISA limit reduced for everyone irrespective of age. If someone can afford to save £20,000 a year they can pay a bit more tax.

I’d also like to see a lifetime cap on what can be held in ISAs.

Someone who has saved/invested the maximum since ISAs began (and may have had TESSAs and PEPs before that), will now have over £300,000 tucked away. Even with a modest annual return of 4%, it’s the equivalent of doubling the tax personal allowance - and that’s unfair.

Thank you Graphite, for clarifying what initiative the OP is referring to

This is a tax only on the cash element that is held in Stocks and Shares ISAs though, isn’t it? Not on Cash ISAs as a whole.

Or has it changed?

Do lots of people hold masses of cash in Stocks and Shares ISAs? I wouldn’t have thought it would be a big tax payment for many?

It seems quite funny that we’re going to have to pay to die.I have vegan signs of my family keeping me a secret in the attic until they’ve had a chance to spend the money🤣🤣🤣

Crossed posts Graphite😀

No dea where the vegan came from🤔🙄

It should be visions.

MSE has produced a good explainer on the ISA changes.

www.moneysavingexpert.com/news/2026/06/cash-investment-isa-reforms/

To quote Martin Lewis:

This is a very blunt tool and it will be very frustrating for many stocks and shares ISA holders. The big issue is if you sell a fund or shares within your ISA, you are then charged tax on any interest if you keep it in cash. Yet many people, sensibly, like to drip-feed money into investments over time to ride out the market ups and downs, and this is a disincentive to do that. The nearest get-around will be to use Money Market Funds in the meantime.

Graphite I cannot agree to capping the amount of ISA’s you can purchase over your lifetime. There is already a cap on what can be invested each tax year.

With the cost of care and care homes/nursing homes your figure of £300,000 could be decimated PDQ. Especially if you live in the South East.

The 'Death Tax' hasn't been announced yet, has it?

I know AB mooted it some time ago, but I don't think it's been announced as something that is going ahead? I think it's a good idea though, and should be popular, as IHT as it stands is a bit of a blunt instrument, and this will mean that the better off will pay 10% of a lot, whilst those with less will still be left with 90% of whatever they have saved.

Doodledog

The 'Death Tax' hasn't been announced yet, has it?

I know AB mooted it some time ago, but I don't think it's been announced as something that is going ahead? I think it's a good idea though, and should be popular, as IHT as it stands is a bit of a blunt instrument, and this will mean that the better off will pay 10% of a lot, whilst those with less will still be left with 90% of whatever they have saved.

If it is instead of IHT at its current rate I could be persuaded

But, I will wait for the announcement before forming an opinion.

Will it include any measures on the money put away in Trusts do you think?

GrannyGravy13

Doodledog

The 'Death Tax' hasn't been announced yet, has it?

I know AB mooted it some time ago, but I don't think it's been announced as something that is going ahead? I think it's a good idea though, and should be popular, as IHT as it stands is a bit of a blunt instrument, and this will mean that the better off will pay 10% of a lot, whilst those with less will still be left with 90% of whatever they have saved.

If it is instead of IHT at its current rate I could be persuaded

But, I will wait for the announcement before forming an opinion.

I think that's probably wise, as we don't know any of the detail at this stage.

David49

These are big money taxes that most of us are going to pay, Im beginning to really like his tax ideas they will provide the money that needs to be spent without borrowing.

AIUI, the interest on (accumulated) Cash ISAs will continue to be tax free. I won't be paying any ISA tax.

I also won't be paying any Death Tax because my shroud has been designed with no pockets .

Phew, no worries.

This is speculation.

It needs to be levied before IHT on all estates if it's going to raise a significant amount 10% has been mentioned.
So if you leave £50000 your estate will pay £5000, if it's £1m it will pay £100,000.
If we really want close the wealth gap every one has to lay something.

ISAs, future interest will pay tax past tax won't, speculation yes and we don't know the details but it would do a lot to correct the inequality we have.

If rather close the wealth gap by moving everyone's wealth up rather than taking from those that have saved.

Aveline

If rather close the wealth gap by moving everyone's wealth up rather than taking from those that have saved.

Me too, but I would also like to see social care doing the same.

If we all pay 10% (which we won't notice as we'll be dead) into a fund that pays for social care for those who need it, then those who have saved won't have all their savings eaten by care costs.

I agree but not fair to also use inheritance tax too.

We don't know that's being mooted, do we?

My understanding - possibly wrong - is that if everyone pays 10% it would bring in more than the current system whereby the top 4% (wealthwise) pay 40% on everything over £1m (or less if not part of a married couple or a widow).

If the proposal is that IHT is paid on top, it wouldn't be unfair, as presumably the estate would be valued after the levy had been taken, so there would be less to assess, and those paying it would have been covered if they needed social care, too.

We do need to see the detail, though.

It's a gamble though. I'd be raging from beyond the grave if I'd had 10% taken and the IHT too. In fact if that was to happen I'd do all the smart things possible to avoid it. Just what the govt doesn't want to happen.

But aren't some people doing that now Aveline, signing their houses over to their children to avoid having to pay care costs to ensure their children have their inheritance?

If you gift your house to your children and continue to live in it rent free then HMRC will treat it as a gift with reservation of benefit. The asset remains part of your estate for Inheritance Tax.

Similarly it would be considered deprivation of assets in a claim for funded care.