The short version

From 6 April 2027, the amount you can put into a cash ISA each year is set to fall from £20,000 to £12,000 if you are under 65. Your overall £20,000 annual ISA allowance is not changing — so you could still shelter the full £20,000, but only up to £12,000 of it in cash, with the rest going into a stocks & shares or innovative finance ISA. Savers aged 65 and over keep the full £20,000 cash allowance. This is an announced change, with the detailed regulations expected in the Autumn.

Crucially, it applies to new contributions from April 2027 onwards. Money already sitting in your existing cash ISAs is not affected.

What is changing

  • Cash ISA allowance (under 65): cut from £20,000 to £12,000 per tax year.
  • Overall ISA allowance: unchanged at £20,000 across all ISA types.
  • So an under-65 could pay in up to £12,000 cash + up to £8,000 into a stocks & shares or innovative finance ISA in the same year.
  • Age 65 and over: the full £20,000 cash ISA allowance is retained.

There is also an anti-circumvention measure: a flat 22% charge is proposed on interest or alternative-finance returns paid on cash that is held inside a non-cash (stocks & shares or innovative finance) ISA. The aim is to stop investment ISAs being used as long-term cash parks to sidestep the lower cash limit.

Why the government is doing this

The reform is intended to nudge more long-term savings out of cash and towards investment, where returns have historically been higher over long periods. Whether that suits you depends entirely on your goals, your time horizon and your appetite for risk — cash and investments do very different jobs.

What this means for savers

If you rely on cash ISAs for tax-free savings, the practical points are:

  • Existing balances are safe — this affects new annual contributions from April 2027, not money already in your cash ISAs.
  • You keep the full £20,000 ISA allowance overall; only the cash portion is capped lower for under-65s.
  • If you regularly fill a cash ISA above £12,000, the 2026/27 tax year may be the last chance to put the full £20,000 into cash before the cut lands.
  • Moving beyond the cash cap means considering a stocks & shares ISA — which carries investment risk and is generally for longer-term money.

If you are weighing up investing part of your allowance instead, our ISA growth calculator shows how contributions could compound over time (illustrative, and investment values can fall as well as rise).

A quick word on advice

This article is general information about an announced policy change, not personal financial advice. The detailed rules are subject to regulations expected later in the year and could change. Cash and investments carry different risks, and what is right for you depends on your circumstances. For decisions about savings or investing, consider speaking to an appropriately authorised UK financial adviser.