Millions of UK savers have been issued a warning regarding their cash ISAs. The Government has confirmed that new ISA rules will be introduced during the new tax year, which include a reduction in the savings limit for millions of people.
New rules will see under-65’s cash ISA limit reduced to £12,000 as well as changes to investment ISAs. From 2027, there will also be regulations against transferring Stocks and Shares ISAs or Innovative Finance ISAs into a Cash ISA, to prevent people from attempting to get around the Cash ISA limit.
The new limit will apply only to those under 65; individuals over 65 will be able to continue using their £20,000 ISA allowance, all in cash. Other limits on ISA types have remained unchanged.
As the changes apply only to contributions made after the deadline, the full £20,000 ISA allowance can be used in cash from the new tax year, April 5, 2026, to April 6, 2027, making this the last year millions of savers can take advantage of the current full allowance.
There are changes coming as the UK Government is hoping to encourage more and more people to invest. Moneysupermarket also warned about HMRC’s plans to “investigate” assets held inside Stocks and Shares ISA that may be ‘cash substitutes’ and introduce a tax charge on interest on uninvested cash held in an investment ISA.
The experts are now urging under-65s to start preparing for the changes, while advising people to consider investing in a Stocks and Shares ISA.
Cash ISA annual limit: £12,000
Lifetime ISA annual limit: £4,000 (counts within £20k allowance)
Stocks & Shares ISA annual limit: Uses remaining allowance
Innovative Finance ISA annual limit: Uses remaining allowance
Junior ISA annual limit: £9,000 (separate allowance