Last reviewed: 1 June 2026
The Chancellor confirmed at the Autumn Budget on 26 November 2025 that the annual Cash ISA subscription limit will be reduced from £20,000 to £12,000 for savers aged under 65, from 6 April 2027. Savers aged 65 and over will continue to use the full £20,000 in cash. The overall ISA allowance stays at £20,000 across all types. The remaining £8,000 for under-65s will need to be placed into a stocks and shares ISA, an Innovative Finance ISA, or (subject to its own £4,000 sub-limit) a Lifetime ISA.
- Effective date: 6 April 2027 (2027/28 tax year onward)
- New cash ISA limit for under-65s: £12,000 per year
- Over-65s: continue to use the full £20,000 cash allowance
- Overall annual ISA allowance: unchanged at £20,000 per person
- Tax on savings interest outside ISAs rises by 2 percentage points from April 2027 (basic 22 percent, higher 42 percent, additional 47 percent)
- Transfers from stocks and shares or Innovative Finance ISAs into cash ISAs will be banned for under-65s
What the rule actually does
Under current rules, an adult can pay up to £20,000 a year into any combination of cash, stocks and shares, Innovative Finance and Lifetime ISAs, with interest, dividends and capital gains earned inside the wrapper free of UK tax. From April 2027 the £20,000 ceiling stays, but for under-65s the cash subscription limit drops to £12,000. The £8,000 difference must go into investment-type wrappers if the saver wants to use the full annual allowance.
Why the age threshold
The policy is set out in HM Treasury's response to the Treasury Committee published on 14 January 2026, signed by Lucy Rigby MP, Economic Secretary to the Treasury. The stated aim is to encourage more household savings to flow into UK-listed companies. The Chair of the Treasury Committee, Dame Meg Hillier, has criticised the design as risking confusion for consumers. Older savers tend to rely more on cash income in retirement, which the Government cites as the basis for the over-65 exemption.
The 1p loophole in stocks and shares ISAs
Press coverage in late May 2026 highlighted that holding cash within a stocks and shares ISA will attract a 22 percent charge on interest from April 2027 under accompanying rules. However, the charge applies only where 100 percent of the investable assets in the wrapper are cash-like. In theory a saver could hold £7,999.99 in cash inside a stocks and shares ISA, place 1 pence in equities, and avoid the charge. HMRC had previously confirmed the principle but had not formally set the rate until recent guidance.
What savers can do before April 2027
The 2026/27 tax year, which began on 6 April 2026 and ends on 5 April 2027, is the last full year under the existing £20,000 cash rule for under-65s. Cash ISA take-up has historically risen ahead of confirmed allowance changes. Money already inside a Cash ISA before April 2027 is unaffected: interest stays tax-free and the balance can stay in cash indefinitely. The new rule applies only to new subscriptions from April 2027 onwards.
What about the Lifetime ISA and Junior ISA
The Lifetime ISA £4,000 sub-limit is unchanged until at least 5 April 2031. The Junior ISA and Child Trust Fund annual subscription limit of £9,000 is also unchanged. The Government has said it will consult on a new ISA product aimed at first-time property buyers, intended in time to replace the Lifetime ISA.
FAQs
Does the £12,000 limit apply to money already in my Cash ISA?
No. The new limit applies only to new subscriptions from 6 April 2027. Balances already in a Cash ISA remain fully tax-free and unaffected.
What if I turn 65 during a tax year?
Rules for savers who reach 65 partway through a tax year will be determined in 2026 following an industry consultation, according to HMRC.
Can I still split my allowance across multiple Cash ISAs?
Yes. From the 2025/26 tax year, savers can open and pay into multiple Cash ISAs in the same tax year, subject to the overall annual limit.
How much extra tax will be paid on savings interest outside ISAs?
From April 2027, tax rates on savings interest rise by 2 percentage points. Basic-rate savers will pay 22 percent (from 20 percent), higher-rate 42 percent (from 40 percent), and additional-rate 47 percent (from 45 percent).
