Introduction
The cash ISA limit is changing, and the date worth holding onto is 6 April 2027. From that day, savers under 65 will be able to pay £12,000 a year into a cash ISA rather than the full £20,000. The overall ISA allowance is not being cut. It stays at £20,000 across every ISA you hold.
That much has been widely reported since Autumn Budget 2025. What has been covered far less is the machinery HM Revenue and Customs published on 23 June 2026 to stop cash simply being routed around the new cap. Three separate rules do that work, and one of them creates a tax charge inside a wrapper most people think of as entirely tax free.
This article sets out the general rule first, then works through the exceptions one at a time, and finishes with the parts of the regime that are genuinely not settled yet. None of it changes what you can do in the 2026/27 tax year, where the cash ISA limit is still the full £20,000.
The information provided on this page and throughout the website is for general information purposes only and does not constitute financial advice. It is important that you conduct your own research and consider your own personal circumstances before making any investment decisions.
Tax rules for ISAs can change and the value of any tax treatment depends on your individual circumstances. The value of investments can fall as well as rise and your capital is at risk. Figures quoted here reflect published government guidance at the date shown, and draft legislation may still change.
Quick Answer: What The Cash ISA Limit Becomes In 2027
From 6 April 2027 the cash ISA limit falls to £12,000 a year for anyone under 65, while the overall ISA allowance stays at £20,000. Savers reach the higher £20,000 cash limit from the start of the tax year in which they turn 65. For the 2026/27 tax year, nothing changes at all.
The General Rule, And The Tax Year It Starts
Autumn Budget 2025 set the headline change: a reduced annual cash ISA subscription limit for savers under 65, effective from 6 April 2027. The overall ISA allowance was deliberately left alone at £20,000 for the 2026/27 tax year and beyond, so the reform changes the shape of the allowance rather than its size.
In practice that means an under 65 saver who wants to use the whole allowance from 2027/28 onwards has to put at least £8,000 of it somewhere other than a cash ISA. A stocks and shares ISA, an innovative finance ISA or a Lifetime ISA all qualify. Nobody is obliged to use the full allowance, and nobody is forced to invest.
| 2026/27 tax year | 2027/28, under 65 | 2027/28, 65 and over | |
|---|---|---|---|
| Overall ISA allowance | £20,000 | £20,000 | £20,000 |
| Most you can pay into a cash ISA | £20,000 | £12,000 | £20,000 |
| Left for other ISA types | Up to £20,000 | At least £8,000 | Up to £20,000 |
| Lifetime ISA limit within that | £4,000 | £4,000 | £4,000 |
Sources: HMRC, ISA reform 2027 anti-circumvention rules factsheet; GOV.UK Individual Savings Accounts; HMRC guidance on managing ISA subscriptions. Verified 10 September 2026.
Exception One: The Cash ISA Limit If You Turn 65
The higher limit is not switched on at your birthday, which is the detail most summaries skip. The factsheet states that entitlement to the £20,000 cash ISA limit applies from the start of the tax year in which an individual turns 65.
So somebody whose 65th birthday falls in March 2029 has the full £20,000 cash ISA limit for the whole of the 2028/29 tax year, including the eleven months before that birthday. The one way transfer restriction described further down is disapplied from the same point. This is a cliff edge rather than a taper: there is no partial entitlement in the year before.
Exception Two: A 22% Charge On Cash Inside An Investment ISA
The obvious way to sidestep a cash cap is to hold cash inside a stocks and shares ISA instead. The factsheet closes that route directly. From 6 April 2027 a flat rate charge of 22% will apply to any interest or alternative finance return paid on cash held within a non cash ISA.
Two practical points follow. First, the ISA manager pays the charge to HMRC, so there is nothing for an individual to declare or calculate. Second, the factsheet sets out no exemption based on the saver’s own income tax position, so it is not a rebate of income tax you would otherwise have paid.
This matters most for anyone who habitually parks a large uninvested balance in a dealing account inside an ISA between decisions. It does not touch dividends, fund distributions or capital growth, which remain outside the charge.
22% on interest, paid by the platform
From 6 April 2027 a flat rate charge applies to interest paid on cash sitting inside a stocks and shares or innovative finance ISA. Your ISA manager remits it to HMRC and you declare nothing.
Exception Three: Money Market Funds Count, But Not On Their Own
The second workaround would be to hold a fund that behaves almost exactly like cash. The factsheet defines cash-like assets narrowly, as money market funds only, describing a money market fund as a low risk, highly liquid fund that invests in short term debt securities.
Those funds stay eligible inside a non cash ISA, but only as a partial allocation. An account whose investments are made up entirely of money market funds will not satisfy the rule. In plain terms, you can use one as a holding place within a diversified account; you cannot build the whole account out of them and call it an investment ISA.
Exception Four: Transfers Will Only Run One Way
The third route would be to subscribe £20,000 to a stocks and shares ISA and transfer the surplus back into cash later. From 6 April 2027 that is blocked. Transfers from non cash ISAs into cash ISAs will not be permitted. Transfers in the other direction, from a cash ISA into a non cash ISA, remain possible.
The restriction is disapplied for those aged 65 and over, from the start of the tax year in which they turn 65. Everything else about moving an ISA stays as it is today, and our guide to ISA transfer rules covers the process and the timescales. GOV.UK confirms you can transfer all or part of an ISA at any time, to the same type or a different type, and that the money can have been paid in this year or in previous years.
Where The Guidance Is Still Unclear
Three things are worth flagging honestly, because the regime is not finished.
- The legislation is still in draft. HMRC has said a technical consultation with industry on the draft legislation will commence, with regulations laid in the Autumn. Detail can still move before 2027.
- Partial allocation is not defined numerically. The factsheet rules out an account made up 100% of money market funds, but does not put a percentage on what an acceptable partial allocation looks like.
- Money already in a cash ISA is not addressed. The factsheet deals with annual subscription limits and does not set out any treatment of balances subscribed before 6 April 2027.
Anyone reading a confident answer on those three points elsewhere is reading an interpretation, not published guidance.
What The Cash ISA Limit Does Not Change
It is just as useful to be clear about what is staying put. The overall allowance stays at £20,000, in the 2026/27 tax year and in 2027/28. The stocks and shares, innovative finance and Lifetime ISA limits are unchanged too, with the Lifetime ISA still capped at £4,000 a year within that overall allowance. Returns earned inside any ISA remain free of UK income tax and capital gains tax, and the change is to how much new money can go into cash, not to what your existing pot is worth.
The rules on how many ISAs you can hold are untouched, and money arriving from a maturing Child Trust Fund continues to sit outside the annual subscription limit. If you want to see what an £8,000 annual contribution could compound to over a long holding period, our compound interest calculator will run the numbers, though returns from investments are not guaranteed in the way a fixed savings rate is.
See how UK stocks and shares ISA providers compare on fees and features, side by side.
Capital at risk.
Frequently Asked Questions
Key Takeaways
The allowance is not being cut
£20,000 a year across all your ISAs in the 2026/27 tax year, and the same again in 2027/28. Only the share of it that may sit in cash changes, and only for savers under 65.
Nothing changes before 6 April 2027
The cash ISA limit for the 2026/27 tax year is still the full £20,000. There is no need to rush a decision this tax year.
Cash inside an investment ISA is not a workaround
A 22% charge on interest, a ban on all money market fund portfolios and a one way transfer rule between wrappers close that route deliberately.
Age 65 is measured by tax year, not birthday
Entitlement to the £20,000 cash limit starts at the beginning of the tax year in which you turn 65, and the transfer restriction lifts at the same moment.
The detail can still move
Draft legislation goes to technical consultation with industry and regulations follow in the Autumn, so treat the figures as firm and the mechanics as near final.
Not sure which platform suits the way you actually invest? Answer a few questions and narrow the list.
Capital at risk.
Sources, all checked 10 September 2026: HMRC, ISA reform 2027 anti-circumvention rules factsheet (23 June 2026); GOV.UK, Individual Savings Accounts; GOV.UK, Transferring your ISA; HMRC, Manage ISA subscriptions for your investors; House of Commons Treasury Committee, Cash Individual Savings Account: Government Response (14 January 2026).
The information provided on this page and throughout the website is for general information purposes only and does not constitute financial advice. It is important that you conduct your own research and consider your own personal circumstances before making any investment decisions.
Tax rules for ISAs can change and the value of any tax treatment depends on your individual circumstances. The value of investments can fall as well as rise and your capital is at risk. Figures quoted here reflect published government guidance at the date shown, and draft legislation may still change.
