NatWest has started sending emails to customers detailing significant changes to Individual Savings Accounts (ISAs) that will take effect from April 6, 2027. The bank, one of the UK's top four clearing banks with a market capitalisation of approximately £46.67 billion and over 20 million customers, is proactively informing its members about the upcoming reforms.
Key Changes from April 6, 2027
Under the new rules, the total ISA allowance remains at £20,000 per year, but for individuals under 65, the amount that can be deposited into a cash ISA will be capped at £12,000. The remaining £8,000 must be invested in non-cash options, such as a stocks and shares ISA. Additionally, transfers from a stocks and shares ISA to a cash ISA will no longer be permitted for under-65s.
For all ISA holders, a 22% charge will apply to any interest earned on cash held within a stocks and shares ISA. Furthermore, stocks and shares ISAs can no longer consist entirely of cash-like investments. These measures are designed to encourage retail investment, according to the government.
Impact on Savers
NatWest's email, titled "ISA changes in 2027 – are your savings in the right place?", explains that the government has shared more details on the reforms. The email states: "The government has shared more details on the ISA changes from 6th April 2027, and we’d like to help you understand what they could mean for you. As this is the last tax year before the new rules come into effect, now could be a good time to take a fresh look at your savings."
For those aged 65 and over, the £12,000 cash ISA limit does not apply; they can still invest their entire £20,000 allowance into a cash ISA. Any tax-free funds built up in a NatWest Cash ISA before April 6, 2027, will remain fully protected and continue to earn tax-free interest.
Government Anti-Circumvention Rules
The government and HM Revenue & Customs (HMRC) have introduced strict anti-circumvention rules to prevent savers from bypassing the £12,000 cash limit. These rules prohibit: subscribing up to £20,000 in cash in a non-cash ISA and leaving it long-term; subscribing £20,000 to a non-cash ISA and then transferring those funds to a cash ISA; and subscribing £20,000 to a non-cash ISA and using the funds to purchase wholly cash-like investments.
NatWest advises customers: "Now could be a good time to think about how you’d like to use your ISA allowance in future - and whether your savings are in the right place for your goals. Whether you’re saving, investing, or a mix of both, taking time now to review your options could help your money go further ahead of the 6th April 2027 changes."
