The £12k Cash ISA Cap Is Coming: Act This Year

The Chancellor confirmed in the November 2025 Budget that from 6 April 2027 the amount under-65s can pay into a cash ISA each year falls from £20,000 to £12,000. The total ISA allowance stays at £20,000, but the extra £8,000 must go into a stocks and shares or other investing-style ISA rather than cash. The stated aim is to nudge cautious savers toward investing.

Two details matter. First, savers aged 65 and over are exempt and keep the full £20,000 cash allowance, at least initially. Second, from April 2027 under-65s will no longer be able to transfer money from a stocks and shares ISA into a cash ISA, which closes an obvious workaround.

This is the first cut to the cash ISA allowance since 2017, and it lands at the same time as a rise in the tax on savings interest held outside an ISA.

The 2026/27 tax year is the last full year you can put a clean £20,000 into a cash ISA as an under-65. After that the cash door narrows to £12,000. If you have a lump sum sitting in a taxable savings account, moving up to £20,000 of it into a cash ISA now locks that money inside the tax-free wrapper before the cap bites.

The timing is sharpened by a second change. From April 2027 the tax on savings interest earned outside an ISA rises by two percentage points, to 22% for basic-rate payers and 42% for higher-rate payers. Picture £15,000 earning 4.5%: that is £675 of interest a year. Inside a cash ISA it is tax-free; outside it, a higher-rate payer would hand over 42% of any interest above their personal savings allowance from 2027.

None of this touches money already in your cash ISA. The cap only applies to new contributions from April 2027, so anything you shelter now stays sheltered.