The UK government just changed the rules around Stocks and Shares ISAs again. But do investors really need to worry?
In most cases, I don’t think so. It’s unlikely to change the way most people invest, but it’s always important to be on top of the latest regulations.
What’s happened?
In 2025, the Chancellor reduced the annual Cash ISA contribution limit to £12,000 from April 2027, while the Stocks and Shares ISA limit stayed at £20,000. But there were still some gaps. This week the government closed them.
Three measures arrive in April 2027:
- A flat 22% charge on interest earned on uninvested cash held inside a Stocks and Shares ISA.
- A ban on portfolios invested entirely in money market funds.
- A block on transferring funds from a Stocks and Shares ISA into a Cash ISA for the under-65s.
Each rule directly plugs a route for anyone trying to shelter £20,000 in cash without actually investing. It’s a blow for anyone with uninvested cash but the logic makes sense.
The reforms are supposed to encourage investing in businesses. But why? When I bought Bunzl (LSE:BNZL) shares, the firm didn’t benefit – the cash went to the previous owner.
The answer is reflexivity. More buying bids up the stock, and a higher price is useful for things like acquisitions (more on that later), or defence against unwanted takeover approaches.
UK stocks have broadly traded at a discount to international peers, which weakens that currency. Higher retail participation helps close the gap.
What to buy right now?
I actually still like the look of Bunzl shares right now. I think it’s an impressive business, but the stock is around 27% off its all-time highs.
The firm sources products like packaging, cleaning supplies, and PPE – consolidates them, and distributes them. In doing so, it saves customers time and money.
Since 2004, the company has made over 220 acquisitions to boost its growth. These have been – and remain – a key part of Bunzl’s growth story.
That means the firm needs a steady supply of potential targets available at sensible prices. And in 2025, the committed spend was well below the five-year average.
I’m keeping a close eye on this. But with a pipeline of over 1,300 potential targets, I’m still optimistic about things picking back up.
More positively, I’m also watching the growth of the firm’s own-brand products. If Bunzl can get this right – and this isn’t guaranteed after a big error last year – it should boost margins.
What to buy right now?
Stocks and Shares ISAs are a hugely valuable asset. But they are not, the government has now made clear, a higher-limit Cash ISA in disguise.
Bunzl is already a big part of my ISA, so I’m thinking carefully. But for anyone with cash to deploy, the stock is worth a look right now.
Should you invest £5,000 in Bunzl Plc right now?
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Stephen Wright owns shares in Bunzl.
