Almost two-thirds of UK adults are unaware of significant changes to Cash ISA rules that take effect from April 2027, according to new research from savings and investment platform Moneybox. The reforms, announced at the Autumn Budget in November 2025, will reduce the annual Cash ISA limit for people under 65 from £20,000 to £12,000.
Key changes to Cash ISA allowances
From April 6, 2027, savers aged under 65 will only be able to pay up to £12,000 into Cash ISAs each tax year. The overall annual ISA allowance will remain at £20,000, meaning those who wish to use their full allowance will need to put at least £8,000 into other eligible types of ISA. For example, a 40-year-old could pay £12,000 into a Cash ISA and £8,000 into a Stocks and Shares ISA during the same tax year.
People aged 65 and over will continue to have access to the full £20,000 annual Cash ISA allowance. Eligibility for the higher limit begins at the start of the tax year in which someone turns 65. The existing £20,000 Cash ISA allowance remains available to eligible adults until April 5, 2027.
Transfer restrictions and new interest charge
The reforms also introduce restrictions on transferring money between different types of ISAs. People under 65 will be prevented from transferring funds from Stocks and Shares ISAs or Innovative Finance ISAs into Cash ISAs, although transfers in the opposite direction will still be permitted. The restriction will not apply to those aged 65 and over.
From April 2027, a flat-rate charge of 22 per cent will apply to interest earned on cash held within Stocks and Shares ISAs and Innovative Finance ISAs. The charge is designed to discourage savers from holding large cash balances within investment ISAs to avoid the lower Cash ISA allowance. ISA providers will be responsible for paying the charge to HMRC, so individual savers will not need to declare the interest themselves. Unlike the new Cash ISA limit and transfer restrictions, the interest charge will also apply to people aged 65 and over.
Changes to cash-like investments and growing confidence
The UK Government is also introducing restrictions on portfolios made up entirely of certain cash-like investments within Stocks and Shares ISAs. The rules initially cover Money Market Funds, which invest in short-term debt securities. Savers will still be able to hold these funds as part of a wider portfolio, but portfolios consisting entirely of these cash-like investments will not qualify under the revised rules.
The Moneybox research, from its Financial Confidence Index, found that 40 per cent of UK adults now feel confident about investing, compared with 33 per cent in 2024. The proportion of adults holding investments has increased from 30 per cent to 44 per cent over the same period. Confidence among people aged 25 to 34 has more than doubled since 2024, rising from 26 per cent to 57 per cent. However, a gap remains between men and women, with 52 per cent of men feeling confident about investing compared with 28 per cent of women.
Brian Byrnes, Director of Personal Finance at Moneybox, said: "It's really encouraging to see investing confidence at a three-year high, particularly among younger adults. But there is still a huge gap between how comfortable people feel saving versus investing, and that's largely because investing can still feel complex and confusing to so many people."
He added: "The Government is right to want more people investing for the long term, but these findings suggest the upcoming changes to the ISA regime need to be part of a much more joined-up effort."
Moneybox warned that introducing additional complexity to the ISA system could undermine progress in encouraging more people to invest. Byrnes said: "With almost two-thirds unaware that there is a planned 22% charge on interest earned on cash held within non-Cash ISAs, and more than a third of those who were aware of the changes, saying they make them feel less confident about investing, there is a real risk of further complexity hitting at exactly the wrong moment."
Savers can continue to use the existing £20,000 ISA allowance during the current 2026/27 tax year. Money already held within an ISA does not count towards a future year's subscription allowance simply because it remains in the account. Anyone considering moving existing ISA savings should use their provider's official ISA transfer process rather than withdrawing the money themselves, which could affect their tax-free savings arrangements. Full details of the changes are available on GOV.UK.
