I lost money on a stocks and shares ISA – what I plan to do when cash ISA is cut

Marc Poskett, has vowed not to use a stocks and shares ISA again, after losing money while saving for his first home. 39-year-old Marc, from Middlesborough, North Yorkshire is “frustrated” about a change in the ISA rules from April, which will mean he can save less into his cash ISA. An ISA is a special account where you never pay tax on the interest or gains you make. There are multiple different types of ISA but the most common are the cash ISA – which is a savings account – or a stocks and shares ISA – where you invest money. Shorts You can currently put £20,000 into an ISA each tax year and the money can be spread across each of these two forms in any way you wish. From April 2027, that will change, and you will only be able to save £12,000 a year into a cash ISA, unless you are 65 or over. The remaining £8,000 of your allowance will have to go into a stocks and shares ISA or the rarely used innovative finance ISA, but Marc says he won’t be using either of these. He first opened a cash ISA in 2017 and saved £20,000 into it to buy his first home in 2024. He’s now saving to buy a second home – a buy-to-let – but says he won’t be pushed to invest instead of using cash. “I previously tried stocks and shares and lost money while I was saving for my first home. My approach come April 2027 will be trying to maximise my cash ISA allowance and put anything above the limit into a standard savings account to buy my second property,” he explained. The housing support co-ordinator from Middlesborough, described the new rules as a “massive change” and will make him have to rethink his finances. “It is going to make a hard process even more confusing because I am now going to have to spread my savings across more accounts,” Marc explained. He’s currently using a cash ISA to purchase the buy-to-let property and has £8,000 saved in there. Marc intends to max out his £20,000 ISA allowance before the rules change in April 2027. He currently puts in £200 a month but will be increasing this to ensure he makes use of the full allowance. Marc said he likes saving into a cash ISA because he really values the safety, steady interest and accessibility the product provides. He added: “It doesn’t go up or down unlike stocks and shares, which gives me peace of mind for my shorter-term savings.” Data from Nottingham Building Society found a quarter of cash ISA holders were now making contributions of more than £15,000 this year, with the average contributions rising 24 per cent since 2024. The government introduced the changes to the ISA rules to encourage more people to invest, but Marc believes it will make buying a second home harder to reach. “I understand that the government wants people to invest but my view is that you’ve worked hard for your money, so why should I have to put my money into something that I don’t want to understand or want to do?” he argues. Brian Byrnes, head of personal finance at Moneybox said that the cash ISA cut would likely frustrate consumers rather than encourage them to start investing, as it will create more complexity. He said: “It will also limit choice and prevent people from building up the financial confidence they need in order to start investing in the first place.” But he did say that he believed more people should be investing, once they had an emergency fund of cash savings built up. He added: “Historically, investments have outperformed cash savings over the long term. And even when you’ve been diligent and feel as though you’ve saved a substantial amount in cash, inflation silently erodes its purchasing power over time.” The i Paper previously reported Andy Burnham’s Government will press ahead with reforms to the cash ISA in the spring – but a major bank has warned that it is still awaiting key details needed to implement the changes in time. With less than seven months to go before the new rules take effect on 6 April, 2027, the finance industry is demanding clarity on how the change will work – with some calling for a delay.