Cash ISA cap from April 2027: what the £12,000 limit for under-65s means for your savings

What changes on 6 April 2027

From the start of the 2027/28 tax year on 6 April 2027, the Cash ISA allowance falls from £20,000 to £12,000 for savers under the age of 65. The Stocks and Shares ISA allowance remains at £20,000 (HMRC, Individual Savings Accounts overview; MoneyHelper Cash ISAs guide).

Savers aged 65 and over keep the full £20,000 Cash ISA allowance. The overall ISA allowance across all wrapper types stays at £20,000 per tax year for all eligible savers.

The change was announced at the Autumn Budget 2025 and confirmed via the Individual Savings Account Amendment Regulations 2026. The current 2026/27 tax year, ending 5 April 2027, is the last in which under-65s can shelter the full £20,000 in cash.

What the £12,000 cap really means

The £20,000 overall ISA allowance is split across the four ISA types: Cash ISA, Stocks and Shares ISA, Innovative Finance ISA, and Lifetime ISA (the LISA has its own £4,000 sub-limit within the £20,000).

Pre-2027 for an under-65 saver, all £20,000 of the allowance could go into a Cash ISA. Post-2027 for an under-65 saver, the split looks like this:

• Up to £12,000 in Cash ISAs
• Up to £8,000 additional in Stocks and Shares ISAs (or Innovative Finance, or LISA up to the £4,000 sub-limit)
• Total still capped at £20,000 across all types

A saver who previously put £20,000 in a Cash ISA each year now has two options: (a) reduce cash savings to £12,000 and use the remaining £8,000 for equities or other ISA types, or (b) restrict to a £12,000 Cash ISA and accept the £8,000 of unused allowance lapses.

The policy intent confirmed by the Treasury is to nudge under-65 savers toward higher-return investment products over the long term. Whether that is the right strategy for an individual saver is a question of personal time horizon and risk tolerance, not editorial advice.

Who the change affects

The change applies based on the saver's age at the point of contribution within the 2027/28 tax year:

• Under 65: Cash ISA allowance £12,000, total allowance £20,000
• 65 and over: Cash ISA allowance £20,000, total allowance £20,000
• Under 18 (Junior ISA): £9,000 Junior ISA allowance, unchanged (HMRC, Junior Individual Savings Accounts)

The change does not affect ISA balances accumulated before 6 April 2027. A saver with £100,000 already in Cash ISAs from prior tax years keeps the full balance in the wrapper with interest still tax-free. Only new contributions from 6 April 2027 onward are subject to the £12,000 sub-cap.

ISA transfers between providers are unchanged. A saver can still transfer a prior-year Cash ISA balance to a different provider without affecting their current-year £12,000 contribution limit.

Worked examples for the 2026/27 transition

These figures illustrate the contribution arithmetic across the cap transition. They are not personal projections.

Saver A, 35 years old, contributing maximum Cash ISA:

• 2026/27 tax year (current): up to £20,000 in Cash ISA, all tax-free interest
• 2027/28 tax year (post-cap): up to £12,000 in Cash ISA; up to £8,000 remaining in S&S ISA or other types
• 5-year impact of using the full £20,000 cash route under current rules then switching post-cap: ~£80,000 in Cash ISAs across 2026/27 and the 4 subsequent post-cap years, plus ~£32,000 of redirected allowance into S&S ISA or other types

Saver B, 40 years old, maximising both cash and S&S today:

• 2026/27: £10,000 Cash ISA + £10,000 S&S ISA (a common split)
• 2027/28: capacity unchanged in practical terms (the £12,000 cash cap is above the £10,000 the saver was already using)
• Direct impact: minimal because the cap only bites for savers using more than £12,000 of the cash allowance

Saver C, 67 years old, retired with cash-preference strategy:

• 2026/27: up to £20,000 in Cash ISA
• 2027/28: still up to £20,000 in Cash ISA (over-65s retain full cash allowance)
• Direct impact: none

Saver D, 50 years old, currently using £15,000 in Cash ISA:

• 2026/27: £15,000 in Cash ISA, £5,000 of allowance unused
• 2027/28: £12,000 cap means losing £3,000 of cash capacity. The remaining £8,000 (£3,000 displaced + £5,000 previously unused) can move to S&S ISA, IFISA, or LISA (up to £4,000 sub-limit)

Calculate Your Savings Growth → (use to model the compound-interest difference between maintaining cash-heavy and shifting to a mixed cash/equities ISA allocation.)

What the 2026/27 window enables

Until 5 April 2027, an under-65 saver can contribute up to £20,000 to a Cash ISA in the current tax year. After that date, the maximum drops to £12,000. The mechanical implication: for any saver with capacity to make a large 2026/27 Cash ISA contribution they would not otherwise make, doing so before 5 April 2027 secures £20,000 of cash-allowance capacity at the higher rate. The contribution becomes a balance in the wrapper that retains tax-free interest in subsequent years regardless of post-2027 contribution rules.

Whether to accelerate Cash ISA contributions into 2026/27 is a personal decision dependent on liquidity, alternative investment preferences, and total ISA capacity available. A qualified financial adviser regulated by the FCA can model whether the accelerated contribution makes sense for an individual's circumstances. Best-buy easy-access Cash ISA rates currently sit close to or above 4.5% per the MoneySavingExpert Best Cash ISA tables, which is competitive with the best taxable easy-access savings accounts for higher-rate taxpayers who have used their Personal Savings Allowance.

Frequently asked questions

Will the Stocks and Shares ISA allowance also fall from April 2027?

No. The Stocks and Shares ISA allowance remains at £20,000 per tax year for all eligible savers, regardless of age. Only the Cash ISA component of the overall £20,000 allowance is capped at £12,000 for under-65s (HMRC, Individual Savings Accounts overview).

What happens to my existing Cash ISA balance on 6 April 2027?

Existing balances are unaffected. The £12,000 cap applies only to new contributions from 6 April 2027 onward. Prior-year balances remain in the wrapper with interest still tax-free. ISA transfers between providers remain unrestricted.

Can over-65s still use a £20,000 Cash ISA?

Yes. Savers aged 65 and over retain the full £20,000 Cash ISA allowance in 2027/28 and beyond, subject to no further policy changes. The change is age-based at the point of contribution within the relevant tax year.

What about Junior ISAs?

The Junior ISA allowance remains £9,000 per tax year for under-18s and is unaffected by the under-65 Cash ISA cap (HMRC, Junior Individual Savings Accounts). Parents and guardians can continue to contribute up to £9,000 per child per tax year.

Where can I check the policy text?

The change was announced at Autumn Budget 2025 and confirmed via the Individual Savings Account Amendment Regulations 2026. The MoneyHelper guidance hub at moneyhelper.org.uk/en/savings/types-of-savings/cash-isas carries the current consumer-facing explanation and is updated as HMRC issues further detail.

Further reading

• HMRC Individual Savings Accounts overview: allowance, types, eligibility
• MoneyHelper Cash ISAs guide: MaPS consumer explanation
• MoneyHelper Stocks and Shares ISAs guide: the alternative allocation for the post-2027 £8,000 window
• HMRC Junior Individual Savings Accounts: unchanged £9,000 allowance
• MoneySavingExpert Best Cash ISA tables: current rate context