UK accounts· United Kingdom
The cash ISA limit is dropping to £12,000. Who it affects
Short answer
From 6 April 2027, savers under 65 can pay up to £12,000 a year into cash ISAs, inside the same £20,000 overall allowance. Savers over 65 can still put the full £20,000 in cash. In the current 2026/27 tax year, which ends on 5 April 2027, anyone can still put all £20,000 into cash ISAs.
The cut was announced in the November 2025 Budget, and HM Treasury’s policy costings (page 79) give the start date as 6 April 2027, the first day of the 2027/28 tax year. It limits what you pay in each year; money already in a cash ISA stays there and keeps earning tax-free interest. National Savings and Investments (NS&I) says the change “won’t have any impact on savings you’ve already contributed to cash ISAs”. ISAs are part of the app’s UK accounts topic.
What changes on 6 April 2027
Paragraph 2.3 of the Budget’s overview of tax legislation and rates sets out the rule: “the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000.” It’s a cap on subscriptions (what you pay in during a tax year). The same paragraph keeps the other limits where they are until 5 April 2031: the £20,000 overall ISA limit, £4,000 for a Lifetime ISA and £9,000 for a Junior ISA.
So an under-65 who uses the whole £20,000 in 2027/28 will have at least £8,000 of it in other kinds of ISA, such as a stocks and shares ISA or an innovative finance ISA. The overview says the change “will be made by secondary legislation to be laid before parliament ahead of commencement in April 2027”, and those regulations will hold the detail.
Two more rules come with the cap. HM Treasury’s First Time Buyer ISA consultation (June 2026, section 4.3) says that “one of the rules announced to avoid the new limit being circumvented is that there will be no transfers from Stocks and Shares ISAs (S&S ISA) and Innovative Finance ISAs (IF ISA) to Cash ISAs from 6 April 2027.” Transfers the other way, from cash ISAs into stocks and shares ISAs, stay permitted in the regime it describes.
The second rule is about cash held inside a stocks and shares ISA, which would otherwise be a way round the cap. The consultation says: “The government also confirmed that rules will be needed to avoid the new limit being circumvented.” It refers to “cash holding rules” for stocks and shares ISAs but doesn’t set them out, and neither do the Budget documents we read. That detail is due in the regulations.
Who it affects
| Saver | 2026/27 (to 5 April 2027) | From 6 April 2027 |
|---|---|---|
| Under 65 | All £20,000 can go into cash ISAs | Up to £12,000 into cash ISAs, the rest into other ISAs |
| Aged 65 or over | All £20,000 can go into cash ISAs | All £20,000 can still go into cash ISAs |
| Turning 65 during 2027/28 | All £20,000 can go into cash ISAs | Not published yet |
The age rule is in the same Budget paragraph: “Savers over the age of 65 will continue to be able to save up to £20k in a cash ISA each year.” HM Treasury’s consultation describes the £12,000 as the limit “for individuals under 65”, and NS&I says that “if you’re aged 65 or over, then you are unaffected by this change”.
Birthdays in the middle of a tax year haven’t been settled. NS&I says that for anyone turning 65 part-way through 2027/28, “the new rules on maximum deposits will be clarified after an industry consultation in 2026.” We don’t know yet whether the test will use your age on the day you pay in or at some other point in the year.
You’re not affected if you pay £12,000 or less into cash ISAs each year. Money you paid in before 6 April 2027 isn’t touched either.
Worked splits of £20,000
For a saver under 65 in the 2027/28 tax year:
| Split | Cash ISAs | Stocks and shares ISA | Within the rules? |
|---|---|---|---|
| All in cash | £20,000 | £0 | No, £8,000 over the cash limit |
| Cash limit, rest invested | £12,000 | £8,000 | Yes |
| Two cash ISAs | £7,000 and £5,000 | £8,000 | Yes, because the £12,000 is a limit per person across all cash ISAs |
| Mostly invested | £5,000 | £15,000 | Yes |
| Cash only, at the limit | £12,000 | £0 | Yes, with £8,000 of the allowance unused |
The first row is allowed today. In 2026/27 anyone can put all £20,000 in cash, and from 6 April 2027 so can a saver aged 65 or over.
A Lifetime ISA payment (up to £4,000) also comes out of the £20,000. A Lifetime ISA can hold cash, stocks and shares or both, according to GOV.UK, and the documents we read don’t say whether a cash one will count toward the £12,000, so we’ve left it out of the table. The Lifetime ISA guide has its own rules.
If you’re under 65 and want more than £12,000 of new savings in cash in 2027/28, the extra has to sit outside an ISA, in an ordinary savings account. That’s where the Personal Savings Allowance comes in.
How the Personal Savings Allowance compares
Interest inside an ISA is tax-free, and the Budget 2025 document says it will stay that way. Interest outside an ISA is taxed once it passes your Personal Savings Allowance for the tax year (6 April to 5 April): £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers and £0 for additional-rate taxpayers. If your other income is below £17,570, the starting rate for savings can cover up to £5,000 of interest as well; it shrinks by £1 for every £1 of other income above the £12,570 Personal Allowance.
At a given rate, the allowance converts into a balance. At 4% AER, £1,000 of interest is what £25,000 earns in a year, and £500 is what £12,500 earns.
A worked example at 4% AER
Say Imran is 45, pays higher-rate tax and wants to keep £20,000 of new savings in cash in 2027/28. He can put £12,000 into a cash ISA and the other £8,000 into an ordinary savings account. At an assumed 4% AER for the whole year:
- The cash ISA earns £480, tax-free.
- The £8,000 earns £320. If that’s his only interest outside an ISA, it’s inside his £500 allowance and there’s no tax to pay.
- If he also keeps £10,000 in an easy-access account at the same rate, that adds £400. His interest outside ISAs is then £720: £220 over the allowance. At the 42% higher rate for savings income that starts on 6 April 2027, the tax on that £220 is £92.40 for the year.
A basic-rate taxpayer with the same accounts pays nothing, because £720 is under £1,000. An additional-rate taxpayer has no allowance at all, so 47% applies to the whole £720 of interest outside ISAs, which comes to £338.40. At this year’s 40% higher rate, Imran’s £220 would cost £88.
These figures assume 4% AER (our assumption for the example, not a rate we found on any account), interest paid once at the end of the year, and a Personal Savings Allowance that stays at its 2026/27 level. The 22%, 42% and 47% savings rates for 2027/28 come from paragraph 1.6 of the Budget overview, and we ran the interest through the site’s compound interest maths. AER is the yearly rate once compounding is counted. APR, APY and AER explained goes through it with one example.
Scroll is education, not advice. Our lessons and calculators explain how money works in general. They don’t know your circumstances, so they can’t tell you what to do with yours. For that, speak to a qualified, regulated adviser in your country.
What isn’t settled yet
- How the age test works for someone who turns 65 during a tax year. NS&I expects that to be clarified after an industry consultation in 2026.
- What the rules on cash held inside stocks and shares ISAs will say. The government says they’ll be needed but hasn’t set them out in anything we read.
- Whether payments into a cash Lifetime ISA will count toward the £12,000. The documents we read don’t say; HM Treasury’s consultation does say a cash version of the proposed First Time Buyer ISA would count toward it.
- The regulations themselves, which the Budget overview says will be laid before Parliament ahead of April 2027.
- Anything the Budget on 28 October 2026 adds or changes.
Under the rules as announced, 5 April 2027 is the last day an under-65 can pay more than £12,000 into cash ISAs in a single tax year. The ISA allowance calculator shows how much of this year’s £20,000 you’ve already used.
Drafted with AI assistance. Every figure was checked against the sources listed, on 14 October 2026.