ISA allowance 2027 explained: what the Cash ISA cut means for you
What's changing with the Cash ISA allowance
From 6 April 2027, the amount you can pay into a Cash ISA each tax year will fall from £20,000 to £12,000 if you're under 65. Your overall ISA allowance stays exactly the same, at £20,000.
The difference is that you'll need to put the remaining £8,000 of your ISA allowance somewhere other than a Cash ISA if you want to use it all - a Stocks & Shares ISA, or a Lifetime ISA, for example.
When does the new limit start
The current £20,000 Cash ISA allowance still applies for the rest of this tax year, which runs until midnight on 5th April 2027. The £12,000 cap takes effect from 6th April 2027, and it only applies to new contributions paid in from that point. Anything you've already saved in a Cash ISA isn't affected.
Why is the Cash ISA allowance being cut
The government's reasoning is that too much household savings is sitting in cash, and it wants to encourage more people to invest instead. Investing gives your money the potential to grow more over the long term.
The Financial Conduct Authority (FCA) estimates that around seven million UK adults hold £10,000 or more in cash that could be invested. Holding more money in cash than necessary - such as beyond an emergency fund that is suited to your personal needs and circumstances - can be detrimental in the long term as you could miss out on the long-term growth potential that comes with investing.
This change is designed to address that, and support greater financial resilience across the UK.
Does this affect people over 65
No, it doesn't. If you're 65 or older on 6 April 2027, your Cash ISA allowance will remain at £20,000, with no changes to how you can use it.
What should you do before April 2027
It's worth thinking about this change sooner rather than later, and making some decisions for your money if the new £12,000 Cash ISA limit will affect your current saving and investing plan. Start by looking at how you're currently splitting your £20,000 between cash and investments, and whether that still makes sense for you.
If you've never used a Stocks & Shares ISA before, this is a reasonable time to get familiar with how one works, even with a small amount, so it doesn't feel unfamiliar once the cap is in place. And remember, money invested for five or more years typically outperforms cash, but it’s totally normal for your investments to go up and down in value along the way.
Explore Moneybox’s Stocks & Shares ISA
April 2027 will arrive sooner than you think, so understanding your options before then means you can be confident in your plan once the new rules take effect.
What's the simplest way to stay on track
Many people find a regular weekly or monthly payment easier to keep up with than trying to find a lump sum at the last minute. If you haven’t got a regular payment set up - such as a weekly or a monthly - try it out today.
ISA and tax rules apply.