The planned 22% charge on cash in investment ISAs is not a new St James’s Place fee. It is a proposed HMRC charge on interest earned from uninvested cash held inside a Stocks and Shares ISA, expected from April 2027. It matters because many investors keep some cash in an investment ISA temporarily, but the rule is designed to stop people using Stocks and Shares ISAs as a substitute for Cash ISAs.

At present, an adult can save up to 20,000 GBP into ISAs in the 2026 to 2027 tax year, across permitted ISA types, according to HMRC (HMRC, 2026). The main adult ISA types include Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs and Lifetime ISAs. Cash ISAs are built for savings interest. Stocks and Shares ISAs are primarily for investments such as funds, shares, investment trusts and bonds.

The proposed charge would apply to interest on the cash element inside a Stocks and Shares ISA. The Guardian reported that, from April 2027, interest on uninvested cash in a Stocks and Shares ISA would face a 22% charge, paid by the ISA provider to HMRC rather than claimed by the investor through Self Assessment (The Guardian, 2026).

St James’s Place has warned that holding cash inside an investment ISA can be a normal part of portfolio management. Investors may hold cash while deciding where to invest, while switching funds, while waiting for dividends to be reinvested, or while fees are taken. That is different from parking a large cash balance inside a Stocks and Shares ISA for months or years simply to earn savings interest.

The practical effect depends on the cash balance and the rate paid. If an investor held 10,000 GBP in uninvested ISA cash at 4% interest, the annual interest would be 400 GBP. A 22% charge would take 88 GBP, leaving 312 GBP. The charge would reduce the interest return, not tax the original 10,000 GBP balance.

This does not mean Stocks and Shares ISAs stop being useful. MoneySavingExpert explains that Stocks and Shares ISAs can shelter investment income and gains from UK tax, subject to ISA rules and investment risk (MoneySavingExpert, 2026). The proposed 22% charge is aimed at cash interest, not at the normal tax shelter for qualifying investments held inside the ISA.

Read also: Cash ISA versus Stocks and Shares ISA in the UK: Complete Comparison for the 2026-27 Tax Year

Read also: Cash ISA versus Stocks and Shares ISA in the UK: Complete Comparison for the 2026-27 Tax Year

It also does not mean investors should rush cash into the market. Investments can fall as well as rise, and money needed in the short term may not belong in shares or funds. MoneyHelper’s savings guidance separates cash savings products from investment risk, which is a useful distinction for anyone deciding whether money is genuinely short term savings or long term investment capital (MoneyHelper, 2026).

As of June 2026, the sensible response is to review, not panic. Check how much cash is sitting in your Stocks and Shares ISA, what interest it earns, why it is there, and how long it has been uninvested. If the cash is waiting for a near term investment decision, the charge may simply become part of normal account administration from April 2027. If the cash is effectively long term savings, a Cash ISA, ordinary savings account, or another plan may fit the purpose better.

If you use St James’s Place or any other adviser or platform, ask how cash balances are managed, whether interest is paid on uninvested cash, and how the provider expects to handle the proposed 22% charge. Provider terms, tax treatment and ISA rules can change, so verify current details with HMRC, the relevant provider, or an FCA authorised adviser before deciding.

This article is general financial education, not regulated financial advice. Nexzoe is not authorised by the FCA. Tax rules and allowances can change each tax year, and personal decisions should be checked with HMRC, a qualified tax adviser, or an FCA authorised Independent Financial Adviser.