Last Updated: 11 October 2026
The cash isa limit is about to change in a way that will affect millions of British savers, and the new rules are already written into law well ahead of the Autumn Budget. From 6 April 2027, anyone under the age of 65 will only be able to put £12,000 a year into cash ISAs, even though the overall ISA allowance stays at £20,000. For households who have spent years building tax-free cash savings, this is a significant shift, and it arrives alongside higher tax rates on ordinary savings interest.
Understanding the new cash isa limit now, rather than next spring, gives you time to plan calmly instead of rushing at the end of the tax year. This guide explains what is changing, who keeps the full allowance, the new charge on cash held inside investment ISAs, and what the changes mean for savings held outside an ISA altogether. It is general information only, not financial advice, and the sensible message from advisers is simple: use the allowances available today, and avoid irreversible decisions based on Budget rumours.
What is the cash ISA limit? The cash ISA limit is £20,000 a year until 5 April 2027. From 6 April 2027 it falls to £12,000 a year for savers under 65, while savers aged 65 and over keep the full £20,000. The overall ISA allowance stays at £20,000 a year for everyone.
What Is the Cash ISA Limit? The Simple Definition
Here is a plain definition: the cash isa limit is the maximum amount of new money you can pay into cash ISAs in a single tax year, and from 6 April 2027 that maximum will be £12,000 for savers under 65, within an unchanged overall ISA allowance of £20,000. At the moment, the two figures are the same: you can use your whole £20,000 allowance in cash if you wish. From April 2027, younger savers who want to use the full allowance will need to place at least £8,000 of it somewhere other than cash.
It helps to separate the two allowances clearly in your mind. The overall ISA allowance of £20,000 covers every type of ISA combined, including cash ISAs, Stocks and Shares ISAs and Innovative Finance ISAs. The new cash isa limit sits inside that total and applies only to the cash part. Nothing about the headline £20,000 figure is being cut, which is why the change can be easy to miss if you only glance at the main allowance in Budget headlines.
The change is not just a rumour, either. The rules were set out in regulations made on 10 September 2026, which means the £12,000 cap for under-65s is already confirmed ahead of the Autumn Budget on Wednesday 28 October 2026. That Budget, delivered by Chancellor John Healey under Prime Minister Andy Burnham with a full forecast from the Office for Budget Responsibility, may bring other announcements, but the cash isa limit itself is settled, and savers can plan around it with confidence.
Cash ISA Limit Now vs From April 2027: The Rules Compared
Seeing the old and new rules side by side makes the change much easier to grasp. Until 5 April 2027, the cash isa limit and the overall allowance are effectively the same number for every adult saver. From 6 April 2027, they split apart for the first time, and your age on that date decides which cash cap applies to you.
| Rule | Now (until 5 April 2027) | From 6 April 2027 |
|---|---|---|
| Overall ISA allowance | £20,000 a year | £20,000 a year (unchanged) |
| Cash ISA subscriptions, under 65 | Up to the full £20,000 | Capped at £12,000 a year |
| Cash ISA subscriptions, aged 65 and over | Up to the full £20,000 | Full £20,000 cash allowance kept |
| Charge on interest on cash inside Stocks and Shares or Innovative Finance ISAs | No such charge | 22% charge applies |
| Tax on savings income above the Personal Savings Allowance | 20% basic rate, 40% higher rate, 45% additional rate | 22% basic rate, 42% higher rate, 47% additional rate from 2027/28 |
For a worked example, imagine a 40-year-old saver who currently puts £18,000 a year into a cash ISA. Under today’s rules that is perfectly allowed. From April 2027, the same saver could put only £12,000 into cash, and would need to consider an investment ISA for the remaining £6,000, hold it in an ordinary savings account and accept the tax position there, or simply save less inside the ISA wrapper. That is the practical meaning of the new cash isa limit for regular savers.
Around the Budget itself, it is worth separating what is confirmed from what is merely rumoured. A helpful starting point is this guide to what is confirmed and what is rumoured ahead of the Autumn Budget, which sets out the position for savers and pension holders. You can also follow developments as they are announced through the Autumn Budget 2026 tracker, which logs confirmed measures as the picture becomes clearer in the run-up to 28 October.
Who Keeps the Full £20,000 Cash Allowance?
The age divide is the part of the reform that will generate the most questions, so it is worth stating plainly. Savers aged 65 and over keep the full £20,000 cash allowance from April 2027. If you are in that group, the cash isa limit for you does not fall at all, and you can continue to use your entire ISA allowance in cash exactly as you do today, subject to the usual ISA rules.
For everyone under 65, the £12,000 cap is a cap on new subscriptions in the tax year, not a cap on the size of your existing cash ISA pot. Money you have already built up in cash ISAs in earlier years is not being taxed, removed or forced to move because of this change. The reform is about future payments in, which is precisely why using your current allowances while the older, more generous cash isa limit still applies is such a common piece of adviser guidance at the moment.
Couples should think about their allowances together as well as separately. Each person has their own ISA allowance and their own cash isa limit, so a household where one partner is over 65 and the other is not will have two different cash caps under one roof. Planning as a household, rather than account by account, can make a real difference to how much cash a family can shelter from tax each year after April 2027.
The 22% Charge on Cash Inside Investment ISAs
The second part of the reform is designed to stop the new cap being sidestepped too easily. From April 2027 there will also be a 22% charge on interest earned on cash held inside Stocks and Shares ISAs or Innovative Finance ISAs. In other words, parking large sums as cash inside an investment ISA, rather than actually investing them, will no longer be a tax-free workaround once the lower cash isa limit takes effect.
This matters because many investment ISAs allow you to hold cash temporarily, for example between selling one investment and buying another, or while you drip-feed money into the market. Small, short-term balances held for genuine investment reasons are a normal part of investing. The charge is aimed at the tax treatment of interest on that cash, so anyone who habitually keeps a large cash balance inside an investment ISA should check how their provider will apply the rules from April 2027.
Taken together, the two measures point in a clear direction: the government wants the ISA system to favour long-term investing over large tax-free cash piles for working-age savers, while protecting older savers who may reasonably prefer the safety and simplicity of cash. Whether or not you agree with that direction, planning around the cash isa limit as it will actually be, rather than as you might wish it to be, is the only sensible approach.
Savings Tax Rises From 2027/28: Why the Limit Matters More
The new cash isa limit does not arrive in isolation. From the 2027/28 tax year, tax rates on savings income rise by two percentage points. Basic-rate taxpayers will pay 22% on interest above their £1,000 Personal Savings Allowance, higher-rate taxpayers will pay 42% above their £500 allowance, and additional-rate taxpayers, who receive no Personal Savings Allowance at all, will pay 47%. Interest earned inside any ISA remains tax-free, which makes the remaining ISA room more valuable, not less.
Context matters here too. Bank Rate stands at 3.75%, having been held in September 2026, and CPI inflation was 3.1% in August, so decent easy-access and fixed rates still pay meaningful interest. That is good news for savers, but it also means larger cash balances held outside an ISA will breach the Personal Savings Allowance sooner and face those higher rates. Comparing your options carefully, starting with our guide to the best savings accounts in the UK, is a sensible first step before the new rates begin.
There is a wider squeeze in the background as well. Headline rises in income tax, VAT and employee National Insurance have been pledged against, but income tax thresholds remain frozen until April 2031, so fiscal drag will pull more people into higher bands as pay rises, and more savers into higher savings tax rates with it. On pensions, at least, there is reassurance: the Treasury has ruled out cutting the 25% tax-free pension lump sum, and the lump sum allowance stays at £268,275. Against that backdrop, a lower cash isa limit is one more reason to organise your savings deliberately rather than by default.
How to Plan Around the New Cash ISA Limit
Good planning for the new cash isa limit is mostly about timing and calm, not clever tricks. Adviser guidance ahead of the Budget consistently stresses the same themes: use the allowances that exist today, keep long-term decisions on a long-term footing, and do not make irreversible moves based on speculation. With that in mind, here are the practical points worth working through:
- Use today’s allowances first: until 5 April 2027 the cash cap is still £20,000 for everyone, so consider making full use of the current tax year and the next one before the £12,000 cap begins.
- Check your age position: if you will be 65 or over when the rules change, your full £20,000 cash allowance is protected, and your planning can stay much closer to what you do now.
- Decide where the extra £8,000 goes: if you are under 65 and save the full allowance, plan in advance whether the balance above £12,000 will be invested, held in taxable savings, or directed elsewhere.
- Mind cash inside investment ISAs: remember the 22% charge on interest on cash held in Stocks and Shares or Innovative Finance ISAs from April 2027, and avoid leaving large cash balances there by accident.
- Review non-ISA savings too: with savings tax rates rising to 22%, 42% and 47% from 2027/28, check how much interest your ordinary accounts earn above your Personal Savings Allowance.
- Consider other tax-free options carefully: for some savers, alternatives such as Premium Bonds and their prize checker play a part in a wider plan, although prizes are never guaranteed and your money does not earn interest.
One warning deserves repeating in full: avoid irreversible moves, especially taking pension money early, based on Budget rumours. The pension lump sum has been explicitly protected, thresholds and rates that are confirmed can be planned around, and anything still in the rumour category may never happen at all. The cash isa limit change, by contrast, is already in regulations, so your ISA planning can and should proceed on facts rather than speculation.
Finally, keep your records tidy. Note how much you have paid into each ISA this tax year, check that you have not exceeded any allowance, and diarise a review before April 2027 rather than after it. A short review each autumn, once the Budget is out of the way, will keep your ISA planning on track without turning saving into a source of stress.
What is the cash ISA limit from April 2027?
From 6 April 2027, the cash ISA limit is £12,000 a year for savers under 65. Savers aged 65 and over keep the full £20,000 cash allowance. The rules were set out in regulations made on 10 September 2026, so the change is confirmed ahead of the Autumn Budget.
What is the cash ISA limit now?
Now, until 5 April 2027, you can pay up to the full £20,000 overall ISA allowance into cash ISAs if you wish. The £12,000 cash ISA limit for under-65s only applies to subscriptions from 6 April 2027 onwards, not to money already saved in earlier years.
Who keeps the full £20,000 cash ISA allowance?
Savers aged 65 and over keep the full £20,000 cash allowance from April 2027. Everyone under 65 will be capped at £12,000 a year in cash ISA subscriptions, although each person has their own allowance, so couples can plan their two allowances together.
Does the overall ISA allowance change in 2027?
No. The overall ISA allowance stays at £20,000 a year for everyone. What changes is how much of it under-65s can hold in cash: £12,000 at most, meaning at least £8,000 of a full allowance would need to go into another type of ISA or be saved elsewhere.
What is the 22% charge on cash in Stocks and Shares ISAs?
From April 2027, interest earned on cash held inside Stocks and Shares ISAs or Innovative Finance ISAs will face a 22% charge. It is designed to stop savers avoiding the £12,000 cash ISA limit by simply parking large cash balances inside an investment ISA instead.
How much will tax on savings income rise from 2027/28?
Savings income tax rates rise by two percentage points from 2027/28. Basic-rate taxpayers will pay 22% on interest above their £1,000 Personal Savings Allowance, higher-rate taxpayers 42% above £500, and additional-rate taxpayers, who get no allowance, will pay 47%. Interest inside an ISA stays tax-free.
Conclusion
Conclusion: the allowance stays at £20,000, but cash gets a smaller share of it.
From 6 April 2027, the cash isa limit falls to £12,000 for savers under 65, while over-65s keep the full £20,000, a 22% charge applies to interest on cash inside investment ISAs, and savings tax rates outside an ISA rise to 22%, 42% and 47%. None of this needs to cause alarm, but all of it rewards early, calm planning. Use the generous allowances available now, decide where savings above the new cash isa limit will go, and revisit your plan after the Autumn Budget on 28 October 2026. For more money guides in plain English, explore our Business coverage here on FamePost, compare savings rates regularly, and remember that this article is general information, not financial advice — if your situation is complex, speak to a regulated financial adviser.
