Cash ISA news

After the Autumn budget announcement by the Chancellor, Rachel Reeves, we explore the key changes to the ISA allowance and how it will affect you and your savings.

What is an ISA?

ISAs and savings accounts work in different ways, depending on how you want to save – for how long, and how much access you want to have to your money.

There are four main types of ISA:

• Cash ISA: An tax-free way to earn interest on your savings.
• Stocks and Shares ISA: An investment account where you can invest in stocks and shares without paying tax on the returns.
• Innovative Finance ISA: Allows you to invest in peer-to-peer lending and other alternative finance products.
• Lifetime ISA: Designed to help you save for your first home or retirement, with government bonuses on contributions.

You can find out more about ISAs in our article Savings Accounts vs ISAs – what’s the difference?

Currently, you can put up to £20,000 into either a Cash ISA or a Stocks and Shares ISA – or split that amount between them – without paying tax on the money or interest you earn.

What’s changing?

From April 2027, the overall ISA allowance each tax year remains at £20,000. However, if you’re under the age of 65, the amount you can pay into a Cash ISA is being reduced to £12,000. The remaining £8,000 can be paid into a Stocks and Shares ISA.

If you’re over 65, you can still put your full annual £20,000 allowance into a Cash ISA.

Why is the Government doing this?

The Government is focused on investment into the UK economy, and wants to encourage more people to think about investing as part of their long-term savings. Investing in a Stocks and Shares ISA means you’re putting the money back into UK markets.

What do I need to do? / Do I need to do anything?

You don’t need to do anything, nothing is changing just yet, but here’s what you need to be aware of.

If you’re aged 65 or older, there’s no change. The £20,000 Cash ISA limit will continue to apply.

If you’re aged 64 or under, your tax-free Cash ISA limit will fall to £12,000 in April 2027. This will only apply to new contributions you make from April 2027 and won't have any impact on savings you've already contributed into a Cash ISA up until this point.

You’ll be able to use the remaining £8,000 of your total ISA limit if you invest in a Stocks and Shares ISA.

There's no change to the annual limit to Stocks and Shares ISAs. This will remain at £20,000.

The good news is that everyone can still make the most of the £20,000 allowance this tax year and next by topping up your ISA before the change comes in.

The earlier you do this the more compound interest you will earn before the allowance decreases.

Find out more about maximising your allowance in our article Could you maximise your savings allowance before ISA tax year end?.

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