Finance expert Andreea Ion has outlined a potential workaround to bypass the government's new 22% tax on interest earned from cash held in Stocks & Shares ISAs. The tax, confirmed by HMRC on Tuesday, June 23, 2026, targets a loophole where savers parked cash in investment ISAs to avoid the reduced Cash ISA allowance.
New ISA Rules and Tax
Chancellor Rachel Reeves announced in the 2025 Budget that the annual Cash ISA limit would be cut from £20,000 to £12,000 for under-65s, aiming to encourage more Britons to invest. However, many savers exploited a loophole by placing extra cash into Stocks & Shares ISAs without investing, simply leaving it as uninvested cash that still earned interest.
HMRC's new rules impose a 22% charge on interest paid on cash within non-Cash ISAs, including Stocks & Shares ISAs. The guidance states that 'Non Cash ISA portfolios made up of 100% cash-like assets will be non-qualifying investments.'
The Loophole: Money Market Funds
Andreea Ion, a former finance professional and social media educator, explained the significance of this wording. In an Instagram post, she said: 'HMRC is set to charge a 22% tax on interest from cash inside a stocks and shares ISA. ... But, there's another loophole. There are super low-risk investments called money market funds that give similar returns to cash. So instead of keeping your money as cash, you could put it in one of those instead.'
She added that HMRC has stipulated that portfolios cannot be 100% in money market funds. 'That means that people could put most of their money in a money market fund, and a tiny amount in something like a global ETF or a stock. And that would comply with the rules as it stands.'
Expert Caution
Ion cautioned against relying solely on this loophole: 'I don't necessarily think that you should do that because investing is still a great way to build wealth over the long run. But, I also don't like what HMRC are doing. So yeah, take that as you will.'
The announcement also included a promise for a new first-time buyer account with no upper age limit to replace the Lifetime ISA.
