New ISA rules from April 2027: Cash caps and investment changes

Key takeaways

• From April 6th 2027, under‑65s will face a reduced £12,000 Cash ISA limit, while the overall £20,000 ISA allowance stays the same.

• Transfers from Stocks & Shares or Innovative Finance ISAs into Cash ISAs will be banned for under‑65s to close a loophole.

• With limits tightening, many savers may need to rethink how they split their allowance across different ISA types.

The UK Government has confirmed that there will be changes to ISA rules beginning at the start of the 2027 tax year in April next year. These include a reduction of contribution limits for Cash ISAs for savers under-65 as well as changes to investment ISAs.

For under-65s, the annual Cash ISA limit will be reduced to £12,000. However, the overall ISA limit will remain at £20,000, meaning that the rest of your contributions can be split across other types of ISAs, like a Stocks and shares ISA.

New rules will also apply to transferring funds, and from 2027 you will no longer be able to transfer funds from a Stocks and Shares ISA or Innovative Finance ISA into a Cash ISA. This is to prevent people from using this method as a loophole to get around the new Cash ISA limit.

The new cap on Cash ISA contributions will only apply to under-65s. Over‑65s can continue to use their £20,000 total ISA allowance entirely in cash, if they wish.

Limits on other ISA types will remain unchanged. So, for a saver under 65, this is what their allowance will look like starting from April 2027.

• Total allowance: £20,000

• Cash ISA annual limit: £12,000

• Lifetime ISA annual limit: £4,000 (counts within £20k allowance)

• Stocks & Shares ISA annual limit: Uses remaining allowance

• Innovative Finance ISA annual limit: Uses remaining allowance

• Junior ISA annual limit: £9,000 (separate allowance)

When are the Cash ISA changes going to happen?

The new cash ISA allowance changes will start from April 6^th 2027, the start of the next tax year.

It should be noted that these changes will only apply to contributions made after the April deadline, so your existing savings won't be affected.

So, you can still use your full £20,000 ISA allowance in a Cash ISA starting from the new tax year - which starts April 5^th 2026 - until April 6^th 2027.

Why are these changes happening?

These new changes form part of a plan by the Government to encourage people to invest.

That's why there are also plans being made for HMRC to investigate certain assets held inside Stocks & Shares ISAs that may be 'cash substitutes' and introduce a tax charge on interest on uninvested cash held in an investment ISA.

Investing can make your savings more resilient and reduce the risk of inflation eating away at your pot, meaning your savings will have a longer lifespan. However, this can carry some risks and it's possible for funds to go down as well as up.

Savers should start thinking now about how to prepare for these changes. Rather than writing off the £8,000 leftover allowance, you may want to think about investing in a Stocks and Shares ISA.

If the extra work of managing a portfolio is a concern, there are providers available that can manage your investments for you or provide you with an adviser for an extra fee.

If you're ready to get ahead of these changes, you can compare cash ISAs and open a Stocks and Shares ISA through MoneySuperMarket.

With Savings by MoneySuperMarket, you can compare, choose, and manage multiple savings accounts all in our app, including Cash ISAs, and with SuperSaveClub you can earn rewards as you save.