What's changing — and the two things that aren't
The Autumn 2025 Budget rewrote the cash side of the ISA. From the 2027/28 tax year, new cash ISA subscriptions are capped at £12,000 a year if you're under 65. Savers aged 65 or over keep the full £20,000 cash allowance. The government's stated logic: Britain holds too much of its long-term wealth in cash, and the wrapper was subsidising the habit.
Two things survive untouched, and most of the panic I've seen online comes from missing them. First, the overall £20,000 ISA allowance is unchanged — the £8,000 that no longer fits in cash can still be sheltered, it just has to go into a non-cash ISA, most obviously stocks & shares. Second, money already inside cash ISAs is not affected. Existing balances stay wrapped, keep earning tax-free interest, and can still be transferred between providers. This is a cap on new money, not a raid on old money.
The bit that makes it bite: from the same date, tax on savings interest rises two points — to 22% basic, 42% higher and 47% additional rate. Cash pushed out of the wrapper lands in taxable accounts at exactly the moment the tax on unwrapped interest goes up. The nudge toward investing is really a shove.
Who's actually affected
Be honest about the maths before rearranging anything. If you save £12,000 a year or less into cash ISAs — which is most people, most years — nothing changes for you. If you're 65 or over, nothing changes either. The people squeezed are under-65s consistently putting £12,000–£20,000 a year into cash: diligent savers building a house deposit, holding a big emergency fund, or parking a windfall.
For them, the cost compounds quietly. Say you save £16,000 a year into cash at 4.25% as a higher-rate taxpayer. From April 2027, £4,000 a year overflows. The first year or two it hides inside your £500 Personal Savings Allowance. But the pile grows — by year three the PSA is exhausted, and by year ten the cumulative tax handed over is well into four figures. All of it avoidable, because the overall allowance never stopped having room for that £4,000.
Run your own overflow
The Cash ISA Limit 2027 Planner takes your age, saving rate and tax band, and shows your new cap, the overflow, and the year-by-year tax cost of doing nothing — PSA-aware, at the new post-2027 savings rates.
Open the 2027 planner →The moves, in order
1. Use the last full £20,000 cash year
The current tax year — 2026/27, ending 5 April 2027 — is the final year under-65s can put the whole £20,000 into cash ISAs. Allowances don't carry forward. If you're sitting on unwrapped cash (in easy-access accounts, or a maturing fixed-rate bond), moving up to £20,000 of it inside the wrapper this year shelters £8,000 more than any future year will allow.
2. Decide the overflow's new home now, not in panic next April
Three candidates, in rough order of tax efficiency. A stocks & shares ISA keeps the money wrapped inside the same £20,000 overall allowance — and it's a wrapper, not a command to buy shares: most platforms let cash sit in a money market fund earning near-Bank-rate interest, tax-free, while you decide. Premium bonds are tax-free but the average return usually trails best-buy savings — reasonable for additional-rate taxpayers with no PSA. Ordinary savings are the default and the worst: interest above your PSA taxed at the new, higher rates.
3. If the overflow should really be invested, admit it
The uncomfortable question hiding under this policy: if you're under 65 and reliably saving £16,000+ a year in cash, is all of it genuinely short-horizon money? Cash for a deposit or emergency fund, absolutely. But cash that's been "waiting for the right moment" for five years is a long-term holding earning a short-term return. If some of your overflow has a ten-year horizon, the compound interest calculator shows what the wrapper could be doing instead — and if you also hold investments outside ISAs, Bed-and-ISA is the companion move while the CGT allowance is £3,000.
4. Check your PSA headroom against the new rates
The Personal Savings Allowance — £1,000 basic, £500 higher, £0 additional — hasn't moved since 2016 and isn't moving now, while rates on interest rise. If you already hold cash outside ISAs, its interest eats the PSA before any overflow arrives. A higher-rate taxpayer with £12,000 of outside savings at 4.25% has already used the whole £500. From April 2027 every unwrapped pound above it is taxed at 42%, not 40% — small per pound, relentless per decade.
The calendar that matters
Now to 5 April 2027: last chance at a £20,000 cash ISA year; savings tax still at today's rates. 6 April 2027: the £12,000 cap begins for under-65s, savings tax rises to 22/42/47, and — same day, different cliff — unused pensions join estates for inheritance tax (that one's a bigger story: see the pension IHT 9-month checklist). April 2027 is quietly the busiest date in UK personal finance for a decade. The theme across both changes is identical: wrappers and allowances get more valuable as everything outside them gets taxed harder.
Frequently asked
When does the cash ISA limit change, and to how much?
Is money already in my cash ISA affected?
Can I get around it with multiple providers?
Where should the overflow go?
Why does 2026/27 matter so much?
This is general information, not financial or tax advice. ISA rules and allowances depend on individual circumstances and can change; the April 2027 figures reflect the measures announced in the Autumn 2025 Budget. WealthR is not authorised by the Financial Conduct Authority. Whether to hold cash or invest — and in what wrapper — is personal to your situation; for significant sums, consult a qualified FCA-regulated financial adviser.