Overview
- From April 2027 the government will reduce the annual tax-free cash ISA allowance for people under 65 from £20,000 to £12,000, reallocating the £8,000 difference to investment use within the overall ISA limit.
- Savers have the 2026/27 tax year as a final chance to use the current £20,000 cash allowance before the change comes into force, and advisers are urging people to review their accounts now.
- The rules introduce a flat 22% charge on interest or equivalent returns earned on uninvested cash held inside stocks and shares ISAs as an anti-circumvention measure to stop using investment ISAs as cash shelters.
- Analysts and providers warn the package adds complexity, may change provider practices on paying interest, and risks pushing some people away from investing or into different account structures.
- Over-65s will keep the full £20,000 cash allowance and the reforms sit alongside wider savings tax increases and planned Treasury consultations on ISA rules and follow-up regulations.