TL;DR
- From 6 April 2027, savers under 65 will be limited to £12,000 a year in cash ISAs (overall £20,000 ISA allowance unchanged).
- Savers aged 65 and over keep the full £20,000 cash ISA allowance.
- 2026 to 2027 is the last tax year to use the full £20,000 cash ISA allowance.
- Best easy access cash ISA rates currently 4.32%; best 1 year fix 4.66%; best 2 year fix 4.65%.
- Tax on non-ISA savings interest rises from April 2027: 22% basic, 42% higher, 47% additional rate.
Last reviewed: 16 May 2026
What is changing
In the November 2025 Budget, the government confirmed that from 6 April 2027 savers under 65 will only be able to subscribe £12,000 a year into cash ISAs. The total annual ISA allowance stays at £20,000, but the remaining £8,000 will have to go into stocks and shares ISAs, innovative finance ISAs, or other qualifying wrappers if savers want to keep their full tax-free allowance.
Savers aged 65 and over are exempt from the new £12,000 cash limit and keep access to the full £20,000 cash ISA allowance.
Why the 2026 to 2027 tax year matters
The current tax year, which began on 6 April 2026, is the last opportunity for under-65s to put the full £20,000 into a cash ISA. Once a deposit is in an ISA wrapper, the tax-free status follows the money in future years even if the rules change.
From April 2027, income tax on savings interest above the personal savings allowance also rises: to 22% for basic rate taxpayers, 42% for higher rate and 47% for additional rate, making the ISA wrapper more valuable in relative terms.
Where rates are right now
Cash ISA rates have held up despite the base rate hold at 3.75%. As of mid May 2026, market-leading rates include:
- Easy access cash ISA: up to 4.32% AER
- 1 year fixed cash ISA: up to 4.66% AER
- 2 year fixed cash ISA: up to 4.65% AER
- 3 year fixed cash ISA: up to 4.60% AER
Rates vary by provider and may be pulled at short notice. The Financial Services Compensation Scheme protects deposits up to £85,000 per banking licence (joint accounts £170,000).
Practical considerations
For savers approaching the £20,000 cap this year, transferring existing ISA balances does not count against the annual allowance. Only new subscriptions do. Flexible ISAs allow withdrawal and replacement within the same tax year without using extra allowance.
Savers nervous about long fixes in a volatile rate environment can split the allowance: part in easy access, part in a 1 year fix. Locking in for 3 to 5 years protects against rate cuts but means missing out if rates rise.
Editorial note: Kael Tripton is an independent UK publisher. This article is general information, not financial, legal or regulated advice. Figures, rates and rules can change after publication. Always check the primary sources linked below before acting.
Frequently asked questions
Does the £20,000 ISA allowance change?
No. The overall ISA allowance stays at £20,000. What changes is how much of it can go specifically into cash ISAs if you are under 65.
What happens to money already in my cash ISA?
Nothing. Money already inside the ISA wrapper keeps its tax-free status. The new £12,000 limit applies only to new subscriptions from 6 April 2027.
I am 64 now. What happens when I turn 65?
From the tax year in which you are 65 or older, the full £20,000 cash ISA allowance is available. HMRC will publish detailed guidance closer to April 2027.
Are stocks and shares ISAs risky?
They carry investment risk: the value can fall as well as rise, and capital is not protected in the way cash deposits are by the FSCS. Over longer time horizons, equity returns have historically outpaced cash, but past performance is not a guide to future returns.
