What the ISA changes mean for your money
There’s been talk from the government for over a year about the future of ISAs in the UK. We’ve recently had confirmation on some changes – here’s more information.
Cash ISA changes
From 6 April 2027, the annual Cash ISA limit for under-65s will drop from £20k to £12k. The overall £20k ISA allowance isn’t changing – the remaining £8k will be available for use in other ISAs.
Savers currently aged 65 and over are unaffected – and the higher limit of £20k will apply once again from the start of the tax year in which you turn 65.
The Lifetime ISA and Junior ISA limits are unchanged at £4k and £9k respectively.
Importantly, existing Cash ISA balances are protected – this change only applies to new contributions from April 2027 onwards. The 2026/27 tax year, which started in April 2026, is the last full year under the current rules, so you can still deposit up to £20k into a Cash ISA this tax year if you’re currently aged under 65.
The 2026/27 tax year is the last where under 65s will have the full £20k ISA allowance available for your Cash ISA. Add money to make the most of it while you still can.
ISA and tax rules apply.
Stocks & Shares ISA changes
This is where it gets more complex – and where some of the coverage has been thin.
Firstly, moving money becomes harder. Once the changes to Cash ISAs take effect, you’ll find that you can move money from a Cash ISA to a Stocks & Shares ISA, but not from a Stocks & Shares ISA to a Cash ISA. This transfer restriction will be disapplied from the start of the tax year in which an individual turns 65.
The government is also imposing a 22% tax on any interest earned from uninvested cash held inside a Stocks & Shares ISA. This measure is designed to stop savers using a Stocks & Shares ISA as a workaround for the reduced Cash ISA allowance.
Another measure introduced under the new rules will mean that if money market funds form 100% of your investments in a Stocks & Shares ISA, the same tax charge will apply on earnings and returns. A money market fund is a low-risk fund that holds your money in short-term financial instruments. Think of it like a savings account that earns a slightly better return, but without the long-term growth potential of actually investing.
Finally, your £20k ISA allowance will remain unchanged. You won’t lose your overall £20k ISA allowance – you just won’t be able to put that full £20k into a Cash ISA if you’re under 65 years old. Instead, you could put £12k into a Cash ISA and £8k into a Stocks & Shares ISA, to set yourself up to build long-term wealth more effectively.
If these changes have prompted you to think more seriously about your Stocks & Shares ISA, acting now means your money has more time in the market to grow – or recover from any dips. It takes less time than reading this article to make a deposit.
ISA and tax rules apply.
What these changes mean for you
The short version: your money is safe and ISAs still work. The longer version: the government’s stated aim is to encourage more people to invest their money with a view to benefiting from higher long-term returns and greater financial resilience. Views across the industry are mixed.
Some have welcomed the investment focus, while others have questioned whether reducing Cash ISA limits will meaningfully shift saving behaviour – with concerns that it adds complexity and friction to the ISA system.
What we’d say: cash savings and investing both have a role to play, depending on your goals, timeline, and circumstances. The right balance is personal – and that’s something worth thinking through at your own pace.
If you’re weighing up where your money should be working hardest, the answer is to stick to your plan and current wealth-building goals. Top up to keep on track.
ISA and tax rules apply.