From April next year, cash ISA rules are changing, but individuals over the age of 65 will be exempt from the most significant updates, including the reduction of the cash ISA allowance from £20,000 to £12,000. The change, announced by Chancellor Rachel Reeves in the Budget last year, is part of a broader government effort to encourage investment over cash savings.
Who Is Affected by the Cash ISA Limit Cut?
The new rules apply to savers under 65. Because the changes take effect in April 2026, everyone born after 1962 will initially be affected. Key changes for those under 65 include the cash ISA limit being halved to £12,000 and the removal of the ability to transfer money from non-cash ISAs to cash ISAs.
Exemptions for Over 65s
According to MoneySavingExpert, the government proposes that from the start of the tax year in which you turn 65, these two rules will reverse. For example, someone born in May 1963 will turn 65 in May 2028, so from April 2028 they regain the £20,000 limit and can again transfer from non-cash ISAs to cash ISAs. This protects older savers from investment risks.
Additional Rules Affecting All Ages
Some changes will apply regardless of age. These include a 22% charge on interest earned on cash held in non-cash ISAs, a restriction that Money Market Funds can only be held as investments if they do not constitute 100% of the non-cash ISA's value, and a definition of 'cash-like assets' as Money Market Funds.
Other ISA Limits Unchanged
Other annual ISA limits remain the same: £20,000 for stocks and shares ISAs, £20,000 for innovative finance ISAs, £4,000 for Lifetime ISAs, and a £20,000 overall annual ISA limit. The government also announced plans to potentially replace the Lifetime ISA with a First-Time Buyer ISA, with further details to be released.
