Cash ISA changes from April 2027: the £12,000 cap explained
From 6 April 2027 under-65s can put only £12,000 a year into cash ISAs. What changes, what does not, and why this tax year matters
The rules for cash ISAs are changing for the first time in years. From 6 April 2027, anyone under 65 will be able to put at most £12,000 a year into a cash ISA. The overall £20,000 ISA allowance stays, but the remaining £8,000 will have to go into a stocks and shares or innovative finance ISA. This guide explains what is changing, what is not, and what to think about before the deadline.
What is changing
| 2026/27 | 2027/28 onwards (under-65s) | |
|---|---|---|
| Overall ISA allowance | £20,000 | £20,000 |
| Maximum into cash ISAs | £20,000 | £12,000 |
| Remainder | Anywhere | Stocks and shares or innovative finance ISA only |
| Stocks and shares to cash ISA transfer | Allowed | Not allowed |
The cap applies to new money paid in during a tax year. It applies per person, not per account, so splitting between two cash ISA providers does not get around it.
What stays the same
- Money already in cash ISAs keeps its tax-free status. There is no requirement to move it.
- Interest earned inside a cash ISA stays tax-free with no cap on the balance.
- Cash ISA to cash ISA transfers continue as now. You can still move old balances to a better rate.
- Over-65s can carry on putting the full £20,000 into cash.
- The Lifetime ISA (£4,000 a year, 25% bonus) is unaffected and counts within the £20,000 overall figure.
Why 2026/27 matters
This is the last tax year in which someone under 65 can put the full £20,000 into cash ISAs. The tax year ends on 5 April 2027. Any unused allowance is lost, so if you have savings sitting outside an ISA and expect to exceed your Personal Savings Allowance, this is the year to move as much as you can into the cash wrapper.
Higher-rate taxpayers have the most to gain. With a Personal Savings Allowance of only £500, £10,000 in a normal account at 5% already uses it up. Every pound of interest above that is taxed at 40%.
The transfer rule change
Today, if you hold a stocks and shares ISA and want to de-risk, you can transfer it to a cash ISA and keep the tax wrapper. From 6 April 2027 that route closes for under-65s. Anyone thinking about moving investments into cash inside an ISA has until 5 April 2027 to do it.
Moving the other way, from cash into stocks and shares, remains allowed, and does not use up any of your allowance.
What to consider
Information only, not personal advice. Investments can fall as well as rise.
- Emergency savings should stay in cash. The change does not force anyone into investing. Cash outside an ISA remains an option, and for many basic-rate taxpayers the Personal Savings Allowance covers their interest anyway.
- If you already use the full £20,000 in cash each year, you will need to decide what to do with the extra £8,000 from April 2027: a normal savings account, Premium Bonds or a stocks and shares ISA are the usual candidates.
- Anyone within a year or two of 65 is unaffected once they reach that age and may simply wait.
- Rates on cash ISAs are usually slightly below the best normal savings accounts. Compare the after-tax rate, not the headline.
Do this now
- Add up interest you expect to earn in 2026/27 outside an ISA.
- If it will exceed your Personal Savings Allowance, use your remaining 2026/27 cash ISA allowance before 5 April 2027.
- If you have a stocks and shares ISA you want in cash, transfer before the same date.
- Diarise 6 April 2027 and plan where the extra £8,000 will go from then.
Providers will update their terms over the coming months. Check gov.uk for the official rules at gov.uk/individual-savings-accounts.