The £12,000 Cash ISA Limit: What Changes in April 2027
Quick answer
From 6 April 2027, if you are under 65 you can pay up to £12,000 a year into a cash ISA, down from £20,000. The overall ISA allowance stays at £20,000, so the other £8,000 can still go into a stocks and shares ISA. Savers aged 65 and over keep the full £20,000 cash limit. Money already in a cash ISA is unaffected, because the limit applies to new payments each tax year. Under-65s will no longer be able to transfer from a stocks and shares ISA into cash, and interest on cash held inside a stocks and shares ISA will face a 22% charge.
Cash ISAs have been a quiet constant for a long time: put in up to £20,000 a year, earn interest, never pay tax on it. That is changing for most savers from April 2027. The government announced the change at Budget 2025 and published the detailed rules in 2026.
The headline is simple. The overall allowance doesn't move, but for people under 65 the cash part of it falls to £12,000. For a lot of savers this won't change anything at all. For others, especially anyone who saves heavily in cash, it's worth thinking about before the new tax year begins.
What changes, and what stays the same
- From 6 April 2027, the most you can pay into cash ISAs in a tax year is £12,000 if you're under 65.
- The total ISA allowance stays at £20,000, so you can still put the remaining £8,000 into a stocks and shares ISA.
- If you're 65 or over, nothing changes: you can still put the full £20,000 into cash.
- Money already sitting in your cash ISA stays put and stays tax-free. The new limit is about how much you can pay in each year, not how much you can hold.
- The current rules still apply for the rest of the 2026/27 tax year, which ends on 5 April 2027.
The rules that stop people working around it
Alongside the lower limit, the government is adding rules to make sure the money it wants invested doesn't simply find its way back into cash.
- If you're under 65, you won't be able to transfer money from a stocks and shares ISA, or an innovative finance ISA, into a cash ISA.
- Interest paid on cash held inside a stocks and shares ISA will face a flat 22% charge, so parking large amounts of uninvested cash there loses some of its appeal.
- There will also be new rules on money market funds and other cash-like investments held in stocks and shares ISAs.
These rules went through a technical consultation in summer 2026, so the final details could still be adjusted. The main limits, £12,000 for under-65s and £20,000 for everyone 65 and over, are set out in HMRC's policy paper and haven't changed since they were first announced.
Who will actually notice
If you pay less than £12,000 a year into a cash ISA, the change makes no practical difference to you. It's people saving more than that in cash each year who need to decide what to do with the rest.
Say you're 40 and have been putting £15,000 a year into a cash ISA. From April 2027, £3,000 of that has to go somewhere else. If you leave it in an ordinary savings account at 4%, it earns about £120 a year. As a basic-rate taxpayer you can earn up to £1,000 of interest tax-free through your Personal Savings Allowance, so that £120 would cost you nothing in tax.
The picture is different for larger savers. A higher-rate taxpayer only gets a £500 allowance, and an additional-rate taxpayer gets none. If you're a higher-rate taxpayer with £30,000 outside an ISA earning 4%, that's £1,200 of interest a year, £700 of it over the allowance, and £280 of tax at 40%. Over several years, keeping more of your savings inside an ISA starts to matter.
What you might do before April 2027
There's no need to rush, but a few things are worth a moment's thought while the current rules still apply.
- If you were planning to save heavily in cash this tax year, the full £20,000 cash allowance is still available until 5 April 2027.
- Think about which of your savings genuinely need to be in cash. An emergency fund and money you'll need within a few years usually belong there. Money you won't touch for many years may be better suited to investing, which is what the change is designed to encourage.
- If investing isn't for you, the extra money can still go in an ordinary savings account. For most basic-rate taxpayers the Personal Savings Allowance means little or no tax.
- To see how a regular ISA contribution grows over time, try the ISA Calculator.
Frequently Asked Questions
Is the overall ISA allowance changing?
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No. It stays at £20,000 a year. What changes, for people under 65, is that only £12,000 of it can go into cash ISAs from 6 April 2027.
Do I have to take money out of my cash ISA?
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No. The new limit applies to how much you pay in each tax year. Money already held in a cash ISA stays there and stays tax-free.
I am over 65. Does this affect me?
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No. If you are 65 or over, you can keep paying up to £20,000 a year into a cash ISA.
Can I move money from my stocks and shares ISA into a cash ISA?
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From April 2027, not if you are under 65. Transfers from stocks and shares ISAs and innovative finance ISAs into cash ISAs will be blocked for under-65s.
Sources
- GOV.UK — Reduction in the cash Individual Savings Account (ISA) limit — HMRC's policy paper: the £12,000 cash ISA limit for people under 65 from 6 April 2027, the unchanged £20,000 overall limit and £20,000 cash limit for those 65 and over, the restrictions on transfers into cash ISAs, the 22% charge on interest on cash held in non-cash ISAs, and the money market fund rules.
- GOV.UK — The Individual Savings Account (Amendment) Regulations 2026: technical consultation — The consultation on the draft regulations, which ran from 25 June to 2 August 2026, and confirms that savers aged 65 and over keep the £20,000 cash limit.
- GOV.UK — Tax on savings interest: how much is tax-free — The Personal Savings Allowance used in the examples: £1,000 for basic-rate taxpayers, £500 for higher-rate and nothing for additional-rate taxpayers.