From 6 April 2027, savers under 65 will only be able to put £12,000 a year into cash ISAs, down from £20,000, under rules HM Treasury and HMRC published in September 2026. The overall ISA allowance stays at £20,000, savers aged 65 or over keep a £20,000 cash limit, and a new 22% charge will apply to interest on cash held inside stocks and shares ISAs. That leaves 161 days, until 5 April 2027, to use this tax year's full £20,000 cash allowance if you want to.
Update, 28 October 2026: In the Autumn Budget the Chancellor announced that the planned £12,000 cash ISA cap will not go ahead – see Budget 2026: What It Means for You for the latest. The same Budget also raised the tax on savings interest to 24%, 44% and 49% from April 2027, and we calculate the extra bill in Savings Tax Rise 2027: 24% Rate, Your Extra Bill Calculated. For the other ISA change in the same Budget – the Lifetime ISA penalty cut to 20% for homes above £450,000 – see our Lifetime ISA changes 2026 explainer.
The change was first announced at the Autumn Budget in November 2025. The detailed guidance followed on 17 September 2026 and the regulations were made shortly afterwards. With the next Budget on Wednesday 28 October, many savers are asking the same question: does this actually affect me, and what does it cost? Here is the plain-English answer, with the numbers.
What exactly is changing in April 2027?
According to the GOV.UK guidance on the reduction in the cash ISA limit, published 17 September 2026, the measure will:
- reduce the annual cash ISA subscription limit to £12,000 for individuals aged under 65 from 6 April 2027;
- keep the cash limit at £20,000 for people aged 65 or over;
- keep the overall ISA limit at £20,000, so an under-65 saver can still use the remaining £8,000 in a stocks and shares or Innovative Finance ISA;
- add restrictions on transfers from stocks and shares ISAs and Innovative Finance ISAs into cash ISAs;
- introduce a flat 22% charge on interest paid on cash held in non-cash ISAs, with rules on Money Market Funds, to stop people using an investment ISA as a disguised cash account.
The limit is about new money you pay in each tax year. It is a subscription limit, not a cap on the savings you already hold in cash ISAs.
One detail the guidance does not spell out is exactly when your age is tested. If you turn 65 during the 2027/28 tax year, ask your ISA provider how they will apply the £20,000 limit before you pay in more than £12,000.
Does this affect me? A quick decision table
| Your situation | Affected? | What it means |
|---|---|---|
| Under 65, you pay in less than £12,000 a year to cash ISAs | Not in practice | You can carry on as you are. |
| Under 65, you usually put more than £12,000 a year into cash | Yes | From April, the extra must go into a non-cash ISA or an ordinary savings account. |
| Aged 65 or over | No change to the cash limit | Your cash ISA limit stays at £20,000. |
| You hold uninvested cash inside a stocks and shares ISA | Yes | Interest on that cash faces a 22% charge from 6 April 2027. |
| You planned to move investment ISA money into cash later | Possibly | New transfer restrictions apply; check with your provider first. |
What could it cost you? The tax maths
For most people the cap costs nothing directly. The cost comes if the money that no longer fits in a cash ISA ends up in an ordinary savings account and pushes your interest above your Personal Savings Allowance. That allowance is £1,000 of interest a year for basic-rate taxpayers, £500 for higher-rate taxpayers and £0 for additional-rate taxpayers. On top of that, savings income tax rates are due to rise by two points from 6 April 2027, to 22%, 42% and 47%, a change also announced at the 2025 Budget.
The examples below are illustrative. They assume a 4% interest rate on every account to keep the maths simple; your actual rate will differ.
| Saver (illustrative) | Savings outside ISAs | Interest a year | Above allowance | Tax from April 2027 |
|---|---|---|---|---|
| Ellie, 32, basic rate, extra £8,000 goes to a savings account | £8,000 | £320 | £0 | £0 |
| Jo, 47, basic rate, £30,000 built up outside ISAs | £30,000 | £1,200 | £200 | £44 (22%) |
| Priya, 52, higher rate, £10,000 buffer plus £8,000 overflow | £18,000 | £720 | £220 | £92.40 (42%) |
None of these are life-changing sums, and that is the honest headline. But for Priya, the tax she pays every year grows the longer the money sits outside an ISA, and it will grow again if rates rise. The bigger risk is not the tax bill. It is losing track of which pot is for what once your savings are split across more accounts.
The new limit is not a tax disaster for most savers. It is a signal to decide, on paper, what each pot of your money is for.
Give every pound a job
When your savings are split between a cash ISA, an investment ISA and an ordinary account, a clear system matters more than the perfect interest rate.
Step III: Own the System is a workbook that helps you:
- map every savings pot and decide what each one is for (emergency buffer, goals, long term),
- build a bills calendar and buffer so you are never raiding the wrong account,
- set up a simple yearly money review, ideal before each new tax year.
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Five things to do before 5 April 2027
- Check how much you have paid into ISAs this tax year. The 2026/27 year runs to 5 April 2027, and the full £20,000 can still go into cash until then.
- Decide how much cash you really need easy access to. An emergency fund should be in cash. Our guide on how big your emergency fund should be helps you set a number.
- Look at uninvested cash in any stocks and shares ISA. From April, interest on that cash faces the 22% charge, so ask your provider how they will handle it.
- Do not rush into investing to beat a deadline. Stocks and shares can fall as well as rise. Only invest money you will not need for at least five years, and get regulated advice if you are unsure.
- Watch Wednesday's Budget. The 28 October 2026 Budget could adjust savings rules or rates. We separate what is already law from the rumours in Autumn Budget 2026: rumours vs what's already set.
Interest rates also matter here. If the Bank of England moves rates, savings rates follow. Our explainer on what a Bank of England rate rise means for savings covers that side, and our breakdown of UK inflation at 3.5% shows why a savings rate below inflation still loses value. For free, impartial guidance on ISAs and savings, MoneyHelper is a good place to start.
Cash ISA changes 2027: quick answers
When does the £12,000 cash ISA limit start?
On 6 April 2027, the first day of the 2027/28 tax year. Until 5 April 2027 you can still put the full £20,000 into cash ISAs.
Do the cash ISA changes apply to over-65s?
No. GOV.UK says the annual cash ISA limit for investors aged 65 or over will remain at £20,000.
Will I lose the money already in my cash ISA?
No. The change limits how much new money you can pay into cash ISAs each year. It does not reduce savings you already hold.
Sources
- HM Treasury and HMRC, Cash Individual Savings Account (ISA) limit reduction, GOV.UK, published 17 September 2026.
- The Individual Savings Account (Amendment) (No. 2) Regulations 2026, legislation.gov.uk.
- GOV.UK, Tax on savings interest: how much is tax-free.
- Deloitte Taxscape, Savings income tax rate increases from 6 April 2027 (Autumn Budget 2025).
- Ross Martin Tax, Anti-circumvention rules confirmed for reduced cash ISA limit, September 2026.
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Educational content only. Not personalised financial advice.