ISA Allowance Changes 2027: What You Need to Know
Based on HM Treasury Budget announcements confirmed November 2025 · Reviewed by the Credibrate finance team · Last updated April 2026
From 6 April 2027, the annual Cash ISA subscription limit for savers under 65 will reduce from £20,000 to £12,000. The overall ISA allowance remains at £20,000 — but the portion you can hold in cash is being cut. Over-65s are exempt and retain the full £20,000 cash limit. These changes were confirmed in the Autumn Budget on 26 November 2025 and apply from the 2027-28 tax year onwards.
2026-27 is the last tax year with a £20,000 Cash ISA limit. The deadline is 5 April 2027.
Model your ISA growth with our ISA Calculator →What is changing?
| 2026-27 (current) | 2027-28 onwards | |
|---|---|---|
| Overall ISA allowance | £20,000 | £20,000 |
| Cash ISA limit (under 65) | £20,000 | £12,000 ⬇ |
| Cash ISA limit (65 and over) | £20,000 | £20,000 |
| Stocks & Shares ISA limit | £20,000 | £20,000 |
| Lifetime ISA limit | £4,000 | £4,000 |
| Junior ISA limit | £9,000 | £9,000 |
| Transfer: S&S ISA → Cash ISA (under 65) | Permitted | Banned ⬇ |
The total £20,000 ISA allowance is not being reduced — only the cash portion is capped at £12,000 for under-65s. Under-65s who currently put their full £20,000 into a Cash ISA will need to put the remaining £8,000 into a Stocks & Shares ISA, Innovative Finance ISA, or Lifetime ISA instead — or forgo that portion of their allowance.
The £12,000 Cash ISA limit applies to new contributions only. Existing Cash ISA balances, however large, are completely unaffected and retain their full tax-free status. The change was confirmed in the Autumn Budget on 26 November 2025. The stated policy aim is to encourage more UK households to invest their savings for long-term growth rather than holding them in cash.
Who is affected?
Under-65s who max out their Cash ISA (most affected)
If you currently contribute the full £20,000 annual allowance to a Cash ISA, from April 2027 you can only put £12,000 in cash. The remaining £8,000 of your allowance must go into a non-cash ISA type or be foregone. The new limit applies only to new contributions made from 6 April 2027 onwards — your existing Cash ISA balance is completely unaffected regardless of how large it is.
Under-65s who contribute less than £12,000/year (largely unaffected)
The average Cash ISA subscription in 2022-23 was £5,296, and less than a third of Cash ISA subscriptions were £12,500 or above — meaning a majority of cash ISA holders will not be affected by the new limit. If you typically contribute less than £12,000 to a Cash ISA each year, no change to your current behaviour is required.
Over-65s (exempt)
The new £12,000 cap applies only to under-65s. Savers aged 65 and over can continue to use their full £20,000 total ISA allowance in cash if they wish. Note: the Government has confirmed this exemption applies “at least initially” — it has not confirmed whether the over-65 exemption will be permanent. Worth monitoring for future Budget announcements.
The transfer ban
From April 2027, transfers from Stocks & Shares ISAs or Innovative Finance ISAs into Cash ISAs will no longer be permitted for under-65s. This closes a potential loophole: without this rule, savers could hold money in a Stocks & Shares ISA wrapper and transfer it into cash each year, effectively circumventing the £12,000 cash cap.
Still permitted: Cash ISA to Cash ISA transfers (e.g. moving to a better rate). These remain allowed.
Still permitted: Cash ISA to Stocks & Shares ISA transfers. Moving from cash into investments remains allowed.
Banned from April 2027 (under-65s): Stocks & Shares ISA or Innovative Finance ISA to Cash ISA transfers.
If you currently use ISA transfers to move money between account types, review your strategy before April 2027. Any S&S ISA to Cash ISA transfer you want to make should be completed before 5 April 2027 to remain within the old rules.
The savings tax rate increase
Alongside the Cash ISA cap, the Autumn Budget 2025 confirmed that the rates of Income Tax applicable to savings income held outside ISAs will increase from the 2027-28 tax year. The Basic rate on savings rises to 22%, the Higher rate to 42%, and the Additional rate to 47%.
The Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers) is unchanged. However, any savings interest above those thresholds will be taxed at higher rates from April 2027 — making the tax-free shelter of an ISA materially more valuable, not less, from that point onwards.
The combination of a lower cash allowance and higher savings tax rates outside ISAs makes ISA planning more important than before: savers who previously left spare allowance unused may find it worth filling each year. Higher-rate taxpayers with significant cash savings outside an ISA should review their position before April 2027. Use our Income Tax Calculator to understand your current tax position on savings income.
What should you do before April 2027?
- 1
Maximise your 2026-27 Cash ISA allowance
This is the last tax year where you can shelter the full £20,000 in cash. If you have savings sitting outside an ISA, using the full allowance before 5 April 2027 is the single highest-impact ISA decision you can make this year. Existing balances are permanently protected once inside the wrapper.
- 2
Review your ISA split for 2027-28
If you currently max your Cash ISA, decide now where the remaining £8,000 will go from April 2027. A Stocks & Shares ISA is the most common alternative. Model different growth scenarios using our ISA Calculator to understand the long-term difference.
Open ISA Calculator → - 3
Do not withdraw and redeposit to switch providers
Always use the official transfer process when moving ISA money between providers. Withdrawing your ISA and redepositing the cash counts as a new contribution in the current tax year and permanently destroys the tax-free status of the withdrawn amount.
- 4
Consider completing any S&S ISA → Cash ISA transfers now
If you currently hold money in a Stocks & Shares ISA that you'd prefer in cash, this transfer type will be banned for under-65s from April 2027. Any such transfer must be completed before 5 April 2027.
- 5
Over-65s: no immediate action required
The exemption is confirmed for the 2027-28 tax year, but described as applying "at least initially." It is worth monitoring future Budget announcements — the government may extend the cap to over-65s in a subsequent year.
Frequently asked questions
When do the ISA allowance changes come into effect?
6 April 2027 — the start of the 2027-28 tax year. The current £20,000 Cash ISA limit applies for the full 2026-27 tax year until 5 April 2027.
Does the overall £20,000 ISA allowance change?
No. The total annual ISA allowance remains £20,000. Only the portion that can be held in cash is being reduced to £12,000 for under-65s. The remaining £8,000 must go into a non-cash ISA type.
Are over-65s affected by the Cash ISA limit reduction?
No. Savers aged 65 and over retain the full £20,000 Cash ISA limit. The reduction only applies to under-65s. The government has described this exemption as applying "at least initially" — it has not confirmed whether it is permanent.
Will my existing Cash ISA balance be affected?
No. The new £12,000 limit only applies to new contributions made from 6 April 2027 onwards. Your existing Cash ISA balance is unaffected and retains its full tax-free status regardless of size.
Can I still transfer between ISA types after April 2027?
Partially. From April 2027, under-65s will no longer be able to transfer from a Stocks & Shares ISA or Innovative Finance ISA into a Cash ISA. Transfers from Cash ISA to Cash ISA (to get a better rate) remain permitted. Cash ISA to Stocks & Shares ISA transfers also remain permitted.
What if I contribute more than £12,000 to a Cash ISA after April 2027?
HMRC will contact you and the excess contribution will need to be withdrawn. Excess contributions do not attract a penalty in themselves but must be corrected. Your ISA provider should prevent over-subscription through their systems.
Why is the government reducing the Cash ISA limit?
The stated policy aim is to encourage more UK savers to invest rather than hold cash. The government argues that long-term investment in stocks and shares generates better returns than cash savings, and wants to increase the flow of household savings into UK companies and economic growth.
Does the Lifetime ISA (LISA) limit change?
No. The Lifetime ISA limit remains at £4,000 per year until at least April 2031. The government has announced a consultation on a potential replacement product for first-time buyers, but existing LISA rules apply in the meantime.
Does the Junior ISA (JISA) limit change?
No. The Junior ISA limit remains at £9,000 per year until at least April 2031. The under-65s Cash ISA cap does not affect Junior ISAs.
Should I move my Cash ISA into a Stocks & Shares ISA before April 2027?
This depends on your personal circumstances, time horizon, and attitude to risk. Cash ISAs offer capital protection; Stocks & Shares ISAs offer higher potential returns but with investment risk. Moving existing cash savings into investments is a significant financial decision — this page provides information only, not financial advice. Consider speaking to a regulated financial adviser.
Sources
- HM Treasury Autumn Budget 2025 — gov.uk
- HMRC ISA technical guidance — gov.uk/individual-savings-accounts
- MoneyHelper ISA allowance guidance — moneyhelper.org.uk
Related calculators
This page provides information only and does not constitute financial advice. ISA rules may change following future Budget announcements. Always verify current allowances on GOV.UK before making financial decisions. Consider speaking to a regulated financial adviser for personalised guidance.