The short version
- From 6 April 2027, if you're under 65, you can pay up to £12,000 a year into cash ISAs.
- Your total ISA allowance stays at £20,000. The other £8,000 can go into a stocks and shares ISA, an innovative finance ISA or a Lifetime ISA.
- If you're 65 or over, nothing changes. You can still put the full £20,000 into cash.
- Savings already in a cash ISA aren't affected. The limit applies to what you pay in each tax year.
Part of Getting started. For the whole process in order, see how to buy your first ETF, step by step.
- £12,000yearly cash ISA limit for under-65s from 6 April 2027
- £20,000total ISA allowance, unchanged
- 22%charge on interest from cash held in a stocks and shares ISA
What's changing
The change was announced in the November 2025 Budget, and HMRC published the detailed rules in June 2026.
| Rule | Until 5 April 2027 | From 6 April 2027 |
|---|---|---|
| Total ISA allowance | £20,000 | £20,000 |
| Most you can pay into cash ISAs (under 65) | £20,000 | £12,000 |
| Transfers from a stocks and shares ISA to a cash ISA (under 65) | Allowed | Not allowed |
| Transfers from a cash ISA to a stocks and shares ISA | Allowed | Allowed |
| Interest on cash held in a stocks and shares ISA | Tax-free | 22% charge |
| A stocks and shares ISA holding only money market funds | Allowed | Not allowed |
The last two rows apply at any age. They stop people getting round the new limit by holding cash inside a stocks and shares ISA. More on that below.
Who it affects
Under 65: the £12,000 cash limit and the transfer ban apply to you.
65 or over: you keep the £20,000 cash limit and can still move money into a cash ISA. This applies from the start of the tax year in which you turn 65. So if your 65th birthday is in December 2027, the higher limit applies for the whole tax year from 6 April 2027.
Everyone: the 22% charge on interest from cash held in a stocks and shares ISA applies at any age.
What isn't changing
- The total allowance is still £20,000 a year.
- You can still split it across several ISAs in the same year.
- Interest in a cash ISA is still tax-free, and investments in a stocks and shares ISA are still free of income tax and capital gains tax.
- You can still move money from a cash ISA into a stocks and shares ISA.
- The Lifetime ISA limit stays at £4,000 a year, within the £20,000.
Cash ISA or stocks and shares ISA: the real difference
Both are tax-free wrappers. The difference is what’s inside them, and that decides how your money behaves.
| Feature | Cash ISA | Stocks and shares ISA |
|---|---|---|
| What's inside | Cash, earning interest | Investments such as ETFs, funds, shares and bonds |
| Can it lose value? | Not in pounds, but it loses buying power whenever interest is below inflation | Yes. It can fall sharply, and you could get back less than you put in |
| If the provider goes bust | FSCS protects up to £120,000 per person, per firm | FSCS can pay up to £85,000 per person, per firm, if your investments are missing. It doesn't cover falls in value |
| Usually suits | Money you may need within the next few years | Money you can leave alone for five years or more |
So what should you do with the other £8,000?
I can’t tell you what’s right for you, because I don’t know your circumstances. But these are the questions that matter, roughly in the order I’d ask them.
- Do you have an emergency fund? Keep a few months of essential spending in easy-access cash before investing anything.
- Do you have expensive debt? Paying off a credit card or overdraft usually beats any investment return you could reasonably expect.
- Will you need the money within five years? If so, cash is usually the safer home. Shares can fall sharply and take years to recover.
- Can you leave it alone for longer? Then investing gives it a better chance of growing faster than prices. Between 1871 and 2020, UK shares beat cash in 92% of ten-year periods, though not every time. Will I lose money? shows the full picture.
You don’t have to invest it at all. Money you don’t put in a cash ISA can sit in an ordinary savings account (investing outside an ISA covers the tax). You may not pay tax on that interest anyway, thanks to the Personal Savings Allowance: up to £1,000 of interest a year for basic-rate taxpayers, £500 for higher-rate and nothing for additional-rate.
Why you can't just hold cash in a stocks and shares ISA
Once the cash limit drops, the obvious workaround is to open a stocks and shares ISA and leave the money in cash. The new rules make that unattractive.
- Cash interest is charged. Interest on cash held in a stocks and shares ISA faces a 22% charge, which your ISA provider pays to HMRC. You don’t need to declare it.
- Money market funds are capped. These low-risk funds are the only investments HMRC treats as “cash-like”. You can hold them, but your stocks and shares ISA can’t be made up entirely of them.
- There’s no way back to cash. Under-65s won’t be able to transfer money from a stocks and shares ISA into a cash ISA.
ETFs, ordinary funds, shares, corporate bonds and government bonds, including gilts, don’t count as cash-like.
The intent is clear: a stocks and shares ISA is for investing. If you want cash, use your £12,000 cash ISA allowance or an ordinary savings account.
Where ETFs fit
A stocks and shares ISA is the account. An ETF is one of the things you can put inside it. If you’re new to them, start with what is an ETF?
A single global index ETF is one of the simplest ways to invest. One fund spreads your money across thousands of companies in dozens of countries, usually for a low annual fee. The fee calculator shows why that fee matters over time, and how to buy your first ETF walks through the steps.
Key dates
- 26 November 2025: the change is announced in the Autumn Budget.
- 23 June 2026: HMRC publishes the detailed rules.
- Autumn 2026: the regulations are due to be laid.
- 5 April 2027: the last day under-65s can pay up to £20,000 into cash ISAs.
- 6 April 2027: the new rules start.
Common questions
- Do I need to move the money already in my cash ISA?
- No. The limit applies to new money paid in each tax year, not to savings you already have.
- Can I still put £20,000 in a cash ISA this tax year?
- Yes. The current rules apply until 5 April 2027.
- I turn 65 soon. Which limit applies?
- The £20,000 cash limit applies from the start of the tax year in which you turn 65.
- Does this change the Lifetime ISA?
- No. Its £4,000 annual limit is unchanged and still counts towards your £20,000.
- Is a stocks and shares ISA safe?
- If your provider fails and your investments go missing, the FSCS can pay up to £85,000. Nothing protects you against the investments falling in value. Are ETFs safe? explains more.
This page explains the rules. It isn't advice about what you should do. Investments can fall as well as rise, and you may get back less than you put in. For free, impartial guidance, try MoneyHelper. Read the full disclaimer.
Sources
- ISA reform 2027: anti-circumvention rules factsheet, HMRC, 23 June 2026
- How ISAs work, GOV.UK
- Tax on savings interest: how much is tax-free, GOV.UK
- Deposit limit change, Financial Services Compensation Scheme
- Investments, Financial Services Compensation Scheme
- Cash held in stocks and shares ISAs to be hit with 22% charge, MoneySavingExpert, June 2026
- Cash ISA limit cut to £12,000, interactive investor
- Macrohistory Database, release 6, Jordà, Schularick and Taylor: UK returns 1871–2020, analysed in Will I lose money?
Facts checked 13 October 2026.