U.K. — The Treasury launched a consultation on reforms to the Individual Savings Account (ISA) regime for April 2027, which includes a new first-time buyer ISA. These changes also involve the end of the Lifetime ISA and a reduced cap on cash ISA savings for individuals under 65.

HM Revenue and Customs (HMRC) outlined plans to ensure stocks and shares ISAs would not be used to bypass new limits on cash ISAs. Interest on cash held in stocks and shares ISAs will be taxed at 22% under rules announced on Tuesday. Investors will also be restricted from holding less than 100% of their stocks and shares ISA in money market funds.

From April 2027, individuals under 65 will be limited to placing up to £12,000 annually in a cash ISA. Chancellor Rachel Reeves announced changes to the ISA regime in the previous year's budget. The consultation asks providers to comment on the current property price limit.

The Treasury stated that the age at which a first home is bought is rising. This new ISA will be available to anyone aged over 18 and will offer a government bonus of 25% of the sum saved. The government bonus will only be paid when a property is purchased, and there will no longer be a 25% penalty for withdrawals not used to buy property.

Rachael Griffin, a tax and financial planning expert at Quilter, said the proposed first-time buyer ISA "marks a clear step towards creating a savings product that better reflects the realities facing aspiring homeowners, but there are issues still to be ironed out." She noted that the £450,000 property price cap has not changed since the Lifetime ISA was launched in 2017. Griffin said the £450,000 cap does not appear to have been addressed within the new product.

Rachel Vahey, AJ Bell's head of public policy, commented on the overall reforms. "Rather than minimise friction between saving and investing, these reforms reduce flexibility, entrench the divide between cash and investment accounts and introduce tax charges and complex age-related allowances," Vahey said. She added, "Riddled with unintended consequences, the reforms do little to encourage new investors." Vahey also said, "Faced with increasingly complex Isa rules, many would-be investors will stick with what they know: cash."