New rules starting in April 2027 will mean you’ll have a smaller allowance – what you can do now to beat them and who’s exempt
In an effort to get more people investing in stocks and shares, the Cash ISA limit is falling by £8,000 a year for millions of Britons. But that doesn’t mean you can’t find a way round it if you act fast.
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What’s happening in April 2027?
The amount you can save in cash is being restricted to under the full allowance for the first time in more than a decade, in the hope this will encourage more people to invest. Existing ISA savings won’t be affected.
This is, in many ways, a return to how ISA were first envisioned. When they were first launched, way back in 1999, there were two sorts of ISA. A cash account and a stocks and shares account. You could put your whole allowance into a Stocks & Shares ISA, but only half of it into a Cash ISA. That changed in 2015 – with people then allowed to save the full limit in cash accounts.
However, people less enamoured by investing will see this as a blow. Limiting what they can save tax-free in cash each year from £20,000 to £12,000.
Exactly how ISA rules are changing
Here’s what’s changing from the start of the new tax year on April 7 and how things stand now.
ISA rules for 2025/26 and 2026/27
- There are still four types of ISA – Cash, Stocks & Shares, Lifetime and Innovative Finance
- You can pay into as many of each type of ISA as you want
- There’s a combined limit of £20,000 that you can spread across ISAs each year (including a £4,000 limit of the Lifetime ISA)
- You keep previous year’s savings but can’t roll over any unused allowances into the next year
- You can transfer your ISA money to a new provider, which keeps it shielded from tax and doesn’t impact your current year’s allowance
You can read more on how ISAs work in our full guide.
Of course, these are the current rules. Last year, the government announced changes to ISAs which will begin in April 2027.
ISA rules changes from 2027/28
From April 2027 onwards, you can only save £12,000 a year into cash accounts. This is counts as part of your overall £20,000 allowance.
However, this limit only applies to people under 65-years-old.
To stop people looking for loopholes, there will also be more restrictions on transfers, meaning under-65s won’t be able to transfer Stocks & Shares ISAs or Innovative Finance ISAs into Cash ISAs at all.
Moreover, any interest earned on cash held in Stocks & Shares ISAs or Innovative Finance ISAs will be subject to tax. It’s not quite clear yet how these cash-like investments will be assessed.
The Lifetime ISA will also be replaced with another aimed at helping first-time buyers – which is what most Lifetime ISAs are used for at the moment anyway.
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The problem with the changes
Cash savings are predictable. You know what you have in there and that amount is not going to go down. Even if the bank you’re saving with goes bust, the first £120,000 you have saved there is protected by the FSCS.
That’s simply not true about stocks and shares. While they offer the potential to grow more quickly, you can’t rely on them for emergency savings or planned works where the cost is fixed.
Most financial experts believe you should have three to six months expenses put away as emergency savings that you can access quickly, while those saving for a house deposit, major building work, new car or any similar large cost need the predictability that cash offers.
Putting that money in a Cash ISA just makes sense, with Stocks & Shares ISAs more useful for longer-term, vaguer savings goals.
Which means a lot of people simply will chose to save money in traditional savings accounts, rather than investing it in the market, no matter how much they have to save or what taxes are applied to the interest they make.
Why acting now matters
New ISA rules make moving money between ISAs a lot easier than it has been in the past. You can, for the first time, pay into more than one Cash ISA at once. That means you can have multiple savings pots you’re contributing to, tax-free.
In the past, it made sense to only open one cash ISA a year, now you can have an emergency-savings ISA, a regular savings ISA and open a fixed-rate saving ISA for any cash you won’t need soon.
Put simply, the arguments for saving money anywhere except and ISA have just become a lot weaker, meaning if you have done that in the past moving your cash now makes sense.
But you can only shift £20,000 a year into a Cash ISA – or less if you’re saving into a different sort of ISA as well. That’s a lot to save in a single year, but a lot less if you’re taking multiple existing savings pots and moving them.
So if you’re planning on moving your money into a tax-free account, you need to do it quickly.
If you act fast you can potentially shift as much as £40,000 that’s languishing in poorly-paying accounts into tax-free ISAs in the next few months (£20,000 before April 7 this year, and another £20,000 before April next year).
If you wait, that drops to £12,000 a year, less any new savings you make that year.
Time to transfer too
Any savings you have in Stocks & Shares or Innovative Finance ISAs that you plan to use soon are also on a time limit to move into a Cash ISA.
If you’re looking to cash these out in the next few years, and don’t want to pay tax on any interest you earn from that cash in the meantime, moving them to a Cash ISA won’t be possible after April 2027.
Moving that money now will mean you can be certain about what you have to spend when you need it. Although you might grow your money faster leaving it where it is.
You don’t have to transfer the full amount, so if you’re just looking to safeguard some of the money from the effects of a stock market crash that would also be possible.
The better news is that transferring an ISA doesn’t affect your annual allowance – so it won’t restrict how much more you can add you your overall ISA pots.
Important: Don’t feel pressured to move before you’ve thought it through
While it can make sense to move your money to a more tax-efficient sort of account – remember that that is all it is.
Even after all the changes come into effect, the only thing you’re losing out on by not having money in an ISA is some of the interest you earn.
Moreover, £12,000 a year is still a hefty sum. Only people earning more than £150,000 regularly save more than that into an ISA each year, according to HMRC.
So don’t be pressured into moving “before it’s too late”. Delaying might cost you a bit of interest in the short term, but choosing the wrong account for you could cost you a lot more overall by locking into lower overall payouts.
