From 6 April 2027, the amount under-65s can save in a Cash ISA each year will be cut from £20,000 to £12,000. The overall ISA allowance remains at £20,000 — but the portion that can sit in cash will be reduced. Savers aged 65 and over are unaffected. The 2026/27 tax year is the last in which anyone under 65 can put the full £20,000 into a Cash ISA.
What exactly is changing?
The Chancellor announced in the Autumn Budget 2025 that the Cash ISA allowance for under-65s will reduce from £20,000 to £12,000 from the start of the 2027/28 tax year. The overall ISA allowance of £20,000 stays the same — meaning the remaining £8,000 would need to go into a Stocks and Shares ISA, Innovative Finance ISA, or Lifetime ISA to use your full allowance.
| 2026/27 (current) | 2027/28 (changing) | |
|---|---|---|
| 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 and Shares ISA | Up to £20,000 | Up to £20,000 |
| Lifetime ISA | Up to £4,000 | Up to £4,000 |
Why is the government doing this?
The government’s stated aim is to nudge savers toward long-term investment products. Cash ISAs are safe and straightforward, but historically deliver lower returns than stock market investments over the long term. By limiting how much can sit in cash, the policy is designed to encourage more money into equities and funds — which the government believes benefits both individual savers and the broader UK economy.
Critics argue the change penalises cautious savers who rely on cash for security rather than investment returns, and that it removes choice from people who are not comfortable with investment risk.
Who is affected?
Under-65s who currently maximise their Cash ISA are most affected. If you currently put the full £20,000 into a Cash ISA each year, from April 2027 you will be limited to £12,000 in cash — meaning you either accept a smaller overall ISA contribution or move £8,000 into an investment ISA.
Savers aged 65 and over are exempt from the change. Their Cash ISA allowance remains at £20,000.
People who don’t use their full ISA allowance are largely unaffected. If you typically put £5,000–£10,000 into a Cash ISA each year, the new £12,000 limit still covers your normal contribution.
What should you do before April 2027?
Use your full 2026/27 Cash ISA allowance. The current tax year is the last opportunity for under-65s to shelter the full £20,000 in cash tax-free. If you have savings sitting outside an ISA, moving them in before 5 April 2027 locks in the full allowance under the current rules.
Consider a flexible Cash ISA. Flexible ISAs allow you to withdraw and replace money within the same tax year without losing your allowance. If you’re unsure about your liquidity needs, a flexible account gives you the most options before the rules change.
Think about whether a Stocks and Shares ISA makes sense for part of your allowance. From 2027/28, using your full £20,000 ISA allowance will require putting at least £8,000 into a non-cash ISA. If you have a five-plus year investment horizon and can tolerate some risk, a Stocks and Shares ISA could make that remaining allowance work harder. For a comparison of the two, see our Cash ISA vs Savings Account guide.
What about the Lifetime ISA?
The Lifetime ISA (LISA) is also under review. The government has signalled it may consult on replacing the LISA with a new First Time Buyers’ ISA. Nothing has been confirmed, but if you’re saving for a first home and are eligible (aged 18–39), it may be worth making use of the existing LISA while it remains available. Our Lifetime ISA guide covers the current rules in full.
Does this affect existing Cash ISA balances?
No. The change only affects new contributions from April 2027 onwards. Money already sitting in a Cash ISA — however large the balance — is unaffected. The £12,000 cap applies only to how much you can newly contribute each tax year, not to existing holdings.
Frequently asked questions
When does the Cash ISA allowance cut take effect?
The change takes effect from 6 April 2027 — the start of the 2027/28 tax year. The current 2026/27 tax year is unaffected. Under-65s can still put the full £20,000 into a Cash ISA until 5 April 2027.
Will the overall ISA allowance be cut?
No. The overall ISA allowance remains at £20,000. Only the portion that can sit in a Cash ISA is being reduced — from £20,000 to £12,000 for under-65s.
Are pensioners affected by the Cash ISA cut?
No. Savers aged 65 and over retain a Cash ISA limit of £20,000. The reduction to £12,000 only applies to under-65s.
Will my existing Cash ISA balance be affected?
No. The cut only applies to new contributions from April 2027. Any money already in your Cash ISA is completely unaffected — it continues to earn tax-free interest regardless of the rule change.
What happens to the remaining £8,000 ISA allowance?
From 2027/28, under-65s can put up to £12,000 in a Cash ISA and use the remaining £8,000 in other ISA types — a Stocks and Shares ISA, Innovative Finance ISA, or Lifetime ISA — to use their full £20,000 annual allowance.