In a significant reform set to take effect in April 2027, Rachel Reeves, the UK's Shadow Chancellor, is introducing changes to Individual Savings Accounts (ISAs) that will impact how savers manage their investments. The annual cash ISA limit for individuals under 65 will be reduced from £20,000 to £12,000, although the overall ISA allowance will remain at £20,000. This means savers can allocate £12,000 to a cash ISA and £8,000 to a stocks and shares ISA, or invest the full allowance in stocks and shares. Additionally, a 22% tax charge on interest earned from cash held in stocks and shares ISAs will be enforced starting in 2027. Over-65s will retain the ability to save up to £20,000 in cash ISAs without facing these new tax charges. The Treasury asserts that these changes are designed to encourage investment in stocks and shares, which historically yield better returns than cash savings. Furthermore, tax rates on savings interest will also increase, with basic-rate taxpayers facing a rise from 20% to 22%, and higher-rate taxpayers from 40% to 42%. This reform aims to stimulate economic growth by promoting investment behaviors among savers.