New research from investment platform etoro reveals significant gaps in savers’ understanding of how the UK rules for ISAs will change from April 2027.

Across seven key elements of the new rules, UK savers understood fewer than three on average. Just 2% demonstrated a strong understanding of the changes, correctly identifying at least six of the seven changes, while almost half (45%) understood two or fewer. For every statement, approximately one third of those surveyed were unsure if the change was true or not, saying in effect that they did not know.

More than half (55%) know the Government is changing ISA rules from April 2027, but understanding of what this means in practice is weaker. Just 38% know that interest on cash held within a Stocks and Shares ISA will be subject to a 22% charge, while almost half (48%) incorrectly believe someone aged under 65 will still be able to transfer money from a Stocks and Shares ISA into a cash ISA once the new rules take effect.

Uncertainty also appears to be shaping how savers expect to respond. Two thirds (67%) believe the ISA system is becoming too complicated, while 68% view the charge on cash held within a Stocks and Shares ISA as a penalty. Almost six in ten (59%) say they would be more likely to leave their money where it is than risk making a mistake, and only 31% feel confident moving money between cash savings and investments under the new system.

That uncertainty risks working against one of the reform’s central objectives: encouraging more people to invest. Just 31% of savers say the reduction in the cash ISA allowance would make them more likely to invest through a Stocks and Shares ISA.

The confidence gap is particularly pronounced among older savers. Three quarters (75%) of 55- 65-year-olds see the charge on cash as a penalty, while just 19% feel confident moving money between cash and investments under the new rules, compared with 38% of 18- 24-year-olds.

Dan Moczulski, UK Managing Director at etoro, said:

“The whole point of this reform was to turn Britain into a nation of investors. Six months out, just 2% of savers have a strong grasp of what is changing, and only three in ten say the reforms will encourage them to invest more.

“The problem isn’t simply that people haven’t heard about the changes. Many have. It’s that they don’t understand what the new rules will mean for their money, and uncertainty risks pushing people towards doing nothing at all.

“You do not change how millions of people handle their savings by shaving eight grand off the cash allowance and hoping they read the Budget documents. If the Treasury wants to build a stronger retail investing culture, it needs to make the case for investing and give people the confidence to act.”

What is changing from 6 April 2027

• The annual cash ISA allowance falls from £20,000 to £12,000 for those under 65. It remains £20,000 for those aged 65 and over.
• The overall £20,000 annual ISA allowance is unchanged.
• A flat 22% charge applies to interest paid on cash held in non-cash ISAs, including Stocks and Shares ISAs. ISA managers pay the charge to HMRC.
• For those under 65, transfers from a Stocks and Shares ISA into a cash ISA will no longer be permitted. Cash ISA to Stocks and Shares ISA transfers remain possible. Those aged 65 and over will continue to be able to transfer from a Stocks and Shares ISA into a Cash ISA.
• A non-cash ISA made up entirely of cash-like assets, defined as money market funds, will be a non-qualifying investment.
• The reduced £12,000 Cash ISA allowance applies to new subscriptions from 6 April 2027 and does not reduce existing Cash ISA balances.