New regulations for Individual Savings Accounts (ISAs) have been formally published, confirming that from April 6, 2027, cash ISA contributions by under-65s will be capped at £12,000 per tax year. This is within the overall £20,000 annual ISA allowance, which remains unchanged until 2030. Existing ISA savings remain protected and tax-free.
Key changes to cash ISA limits
For those under 65, the maximum sum that can be placed into a Cash ISA will fall from £20,000 to £12,000 per tax year. To make full use of the £20,000 annual allowance, savers will be required to place the outstanding £8,000 into a Stocks and Shares ISA, Innovative Finance ISA, or another non-cash vehicle. This ceiling relates solely to fresh contributions; any funds saved prior to April 2027 stay protected and tax-free.
The government is bringing in sub-limits and anti-circumvention penalties to push savers away from cash towards retail investments. To stop savers exploiting an investment vehicle to sidestep the reduced Cash ISA threshold, a flat 22% tax penalty will be imposed on any interest generated from uninvested cash sitting within a Stocks and Shares ISA. This penalty applies across the board to all age groups and income levels.
Transfer rules and other allowances
ISA transfers will become a one-directional process for those under 65. Funds can be moved freely from a Cash ISA into a Stocks and Shares ISA, but it will no longer be possible to transfer money from a Stocks and Shares ISA back into a Cash ISA.
Low-risk money market funds (which pay interest similar to cash) can still be held within a Stocks and Shares ISA. However, they cannot account for 100% of a portfolio, or HMRC will classify the holding as a non-qualifying investment.
Junior ISA and legislation timeline
The allowance for Junior ISAs remains unchanged at £9,000 per tax year. It is still possible to open and contribute to multiple ISAs of the same type across different providers within the same tax year, provided savers remain within their overall limits.
Andy Burnham's government formally published amended legislation on September 22, confirming the technical framework for the upcoming ISA restrictions. This update follows the conclusion of the summer industry consultation and sets out the legal text for the changes due to come into effect on April 6, 2027.
