Autumn Budget announces cancellation of 2027 ISA changes

Key takeaways

• The UK Government has scrapped plans to reduce the Cash ISA allowance to £12,000 for under-65s from April 2027.

• Savers of all ages will continue to be able to put up to £20,000 a year into a Cash ISA, within the overall £20,000 annual ISA allowance.

• The Government has also announced plans to work with the investment industry on a new ISA incentive aimed at people investing in a Stocks and Shares ISA for the first time.

The Government has reversed its planned changes to Cash ISAs, which were due to take effect from April 2027.

Under the original proposals, people under 65 would have been limited to paying £12,000 a year into a Cash ISA, although the overall annual ISA allowance would have remained at £20,000.

The plans also included restrictions on transfers from Stocks and Shares and Innovative Finance ISAs into Cash ISAs, as well as a 22% charge on interest earned from cash held in non-cash ISAs. However, these changes were scrapped in the 2026 Autumn Budget.

The Cash ISA limit will remain at £20,00 for everyone, regardless of age. Transfers from Stocks and Shares ISAs into Cash ISAs will continue to be permitted, while interest earned on cash held within a non-cash ISA will remain tax-free.

What will the ISA allowances be in 2027?

Savers in 2027 will continue to have an overall ISA allowance of £20,000 for the tax year. You can use the full allowance for a Cash ISA or divide it between different types of ISA.

The allowances are:

• Overall annual ISA allowance: £20,000

• Cash ISA: Up to the full £20,000 allowance

• Lifetime ISA: Up to £4,000, which counts towards the £20,000 overall allowance

• Stocks and Shares ISA: Can use some or all of the overall allowance

• Innovative Finance ISA: Can use some or all of the overall allowance

• Junior ISA: Separate annual allowance of £9,000 per child

Why were the 2027 ISA changes scrapped?

The proposed £12,000 Cash ISA cap was intended to encourage more people to invest rather than hold all their ISA savings in cash. The accompanying transfer restriction and tax charge were also designed to prevent savers from using non-cash ISAs to get around the lower limit.

The Government has now chosen a different approach. Rather than reducing the amount people can save tax-free in cash, it plans to work with the investment industry to explore a new ISA incentive for people investing through a Stocks and Shares ISA for the first time.

This means savers can continue to choose whether to keep their ISA allowance in cash, invest it, or split it between different ISA types.

Kara Gammell
Personal Finance & Insurance Expert

Is savings or an ISA right for you?

The decision to keep the £20,000 cash ISA allowance gives savers plenty of scope to continue earning tax-free interest.

With higher rates of tax on savings income coming from April 2027, it’s worth checking whether your savings interest exceeds your tax-free allowances and considering whether an ISA could work harder for you.

Remember to compare savings rates too, as tax isn’t the only factor when choosing where to keep your money.

Cash ISAs and savings may be more suitable for short-term goals or people who do not want to risk losing money, but a Stocks and Shares ISA may be worth considering for longer-term goals, although investments can fall as well as rise.

Whether you're saving or investing, you can explore and compare ISA options with MoneySuperMarket, and 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.