Autumn Budget on 28 October 2026. The Chancellor could change some of these rules. We will re-check this page in the week after the Budget and update the date below.
In 30 seconds
- From 6 April 2027, the yearly cash ISA limit for under-65s falls from £20,000 to £12,000.
- The total ISA allowance stays at £20,000, so £8,000 can still go into stocks and shares or Innovative Finance ISAs.
- If you turn 65 in a tax year, you keep the full £20,000 cash limit for that whole tax year.
- Under-65s will no longer be able to transfer from a stocks and shares ISA into a cash ISA.
- For 2026/27 you can still put the full £20,000 into a cash ISA.
Key figures
What is changing
Every adult in the UK can put up to £20,000 a year into ISAs, where interest, dividends and gains are free of tax. Today you can put all of it into a cash ISA if you want to.
From the 2027/28 tax year, which starts on 6 April 2027, that changes for anyone under 65:
| 2026/27 | 2027/28, under 65 | 2027/28, 65 and over | |
|---|---|---|---|
| Total ISA allowance | £20,000 | £20,000 | £20,000 |
| Most you can put into cash ISAs | £20,000 | £12,000 | £20,000 |
| Can go into stocks and shares or Innovative Finance ISAs | £20,000 | £20,000 | £20,000 |
So an under-65 who wants to use the full £20,000 will need to put at least £8,000 of it somewhere other than cash.
The government's stated aim is to encourage more people to invest rather than hold large sums in cash over the long term.
The 65 test: it is about the tax year, not your birthday
You keep the £20,000 cash limit from the start of the tax year in which you turn 65. If your 65th birthday is on 20 February 2028, you get the higher limit for the whole of the 2027/28 tax year, from 6 April 2027.
The rules that stop people getting round it
HMRC has added three rules so that under-65s cannot simply rebuild the old £20,000 cash limit:
- No transfers from stocks and shares into cash. Under-65s will not be able to move money from a stocks and shares ISA or an Innovative Finance ISA into a cash ISA. Moving the other way, from cash into stocks and shares, is still allowed.
- A charge on cash sitting inside a stocks and shares ISA. If you leave money uninvested in a stocks and shares ISA, the interest it earns will face a flat 22% charge. Your ISA provider pays it to HMRC; you do not need to declare anything. This applies whatever your age.
- No "cash in disguise". A stocks and shares ISA cannot be made up entirely of money market funds, which behave much like cash. Portfolios that hold some cash-like funds alongside other investments are still fine.
Why this matters more because of the savings tax rise
Outside an ISA, the tax on savings interest is going up at the same time. From 6 April 2027 the savings tax rates rise by two percentage points:
- basic rate: 22% (from 20%);
- higher rate: 42% (from 40%);
- additional rate: 47% (from 45%).
The Personal Savings Allowance does not change. Basic-rate taxpayers can still earn £1,000 of interest a year tax-free, higher-rate taxpayers £500 and additional-rate taxpayers nothing.
For a higher-rate taxpayer with large cash savings, the smaller cash ISA limit and the higher tax rate together make a noticeable difference. On £8,000 earning 4% interest, that is £320 a year of interest. Outside an ISA, once the £500 allowance is used up, 42% tax takes £134.40 of it.
Your options before and after April 2027
Before 6 April 2027
For the 2026/27 tax year you can still put the full £20,000 into a cash ISA. Money already in a cash ISA stays there and stays tax-free; the new limit only applies to new money paid in from 2027/28.
If you want to keep a large cash buffer tax-free, using this year's full allowance in cash is the simplest thing you can do now.
From 6 April 2027, if you are under 65
- Put £12,000 in cash and £8,000 into investments, if you can leave that money alone for five years or more.
- Put £12,000 in cash and keep the rest in ordinary savings, using your Personal Savings Allowance first.
- Consider a pension instead, if the money is for retirement. Pension contributions get tax relief on the way in; ISAs do not. But pension money is locked away until at least 55, rising to 57 in 2028. See ISA or pension: which should come first?
- Premium Bonds pay tax-free prizes rather than interest and sit outside the ISA allowance. Returns vary and are not guaranteed.
Which mix suits you depends on when you will need the money. Cash is for money you may need within a few years. Investments can fall in value and are better for money you can leave alone for longer.
Retirement savers: what to watch
If you are approaching retirement and planned to move investments into cash ISAs as you get closer, the transfer ban matters. Until you are 65, you will not be able to move money from a stocks and shares ISA into a cash ISA. You can still sell investments and hold cash inside the stocks and shares ISA, but the interest would face the 22% charge.
Once you reach the tax year in which you turn 65, both the £20,000 cash limit and the freedom to transfer into cash come back.
Common questions
Does the £12,000 limit apply to money I already have in a cash ISA?
No. It limits new money paid in each tax year from 2027/28. Savings already in a cash ISA stay where they are and stay tax-free.
I turn 65 in the 2027/28 tax year. Which limit do I get?
The full £20,000 cash limit. HMRC says the higher limit applies from the start of the tax year in which you turn 65.
Can I still move a cash ISA into a stocks and shares ISA?
Yes. Transfers from cash into stocks and shares remain allowed. Only transfers the other way are blocked for under-65s.
What about Lifetime ISAs and Junior ISAs?
The Lifetime ISA limit of £4,000 counts within your £20,000 total. Junior ISAs have their own separate £9,000 allowance and are not part of this change.
Sources
This guide is general information, not personal financial advice. Rules can change and your situation may differ. For free, impartial help, contact MoneyHelper, or speak to a regulated financial adviser.
