Cash ISA Limit Cut to £12,000: What to Do Before April 2027

What is changing?

From 6 April 2027, the amount under-65s can pay into a cash ISA each tax year is being reduced. The overall ISA allowance stays at £20,000, but the share you can hold in cash is being capped.

The change was announced at the 2025 Budget. Until then — including the 2025/26 and 2026/27 tax years — the full £20,000 can still go into a cash ISA, so there is a window to use the higher limit while it lasts.

• Overall ISA allowance: stays at £20,000 per tax year.
• New cash ISA cap for under-65s: £12,000 per tax year from 6 April 2027.
• The remaining allowance can still be used in Stocks & Shares or other ISA types.

Who is affected — and who is exempt?

The cut applies to savers under 65. If you are 65 or over at the start of the tax year, you keep the full £20,000 cash ISA limit. The government framed this as protecting older savers who rely on cash.

Money already in your ISA from previous years is not affected. The cap only applies to new contributions from the 2027/28 tax year onwards — existing balances stay tax-free and protected.

Why the government is doing this

The aim is to nudge some long-term savers towards Stocks & Shares ISAs and investing, rather than holding large cash balances. Whether that suits you depends on your goals and timeline, not the policy.

Cash still makes sense for money you may need within a few years, an emergency fund, or a near-term goal like a house deposit — where you do not want the value to fall.

What to do before April 2027

If cash ISAs are part of your plan, the practical takeaway is to use the higher limit while it is available. The 2025/26 and 2026/27 tax years are the last two where under-65s can put the full £20,000 into cash.

Use our ISA Allowance Calculator to see how much of your £20,000 you have left this tax year before deciding how to split it.

• Check how much of this year's £20,000 allowance you have already used.
• Consider topping up your cash ISA before 5 April while the £20,000 cash limit applies.
• Decide whether some of your allowance is better in a Stocks & Shares ISA for long-term money.

Why ISAs matter more now

Tax on savings interest earned outside an ISA is also rising from April 2027, so the tax-free wrapper of an ISA becomes more valuable even with the new cash cap.

If your savings interest is creeping above your Personal Savings Allowance, sheltering more in an ISA can stop HMRC taxing it. Our Savings Interest Tax Code Calculator can show whether your interest is likely to be taxed.

Check your ISA allowance

Use our ISA Allowance Calculator to track how much of your £20,000 you have left for the current tax year and plan contributions across cash and investments before the rules change.