The Cash ISA £12,000 cap: what changes in April 2027

What is changing to Cash ISAs on 6 April 2027?

At the Autumn Budget on 26 November 2025, the Chancellor announced a new annual Cash ISA subscription limit of £12,000 for savers under 65, taking effect from 6 April 2027. The change was confirmed in the Budget's Overview of Tax Legislation and Rates and turned into draft regulations in June 2026. The overall ISA allowance is untouched: you can still shelter £20,000 a year in total. What changes is how much of that £20,000 can sit in cash.

The mechanics come from draft regulation 4ZA(1C): in any year in which you are 64 or under at the end of that tax year, your Cash ISA subscription limit is £12,000. The Stocks & Shares and Innovative Finance limits stay at £20,000, so the £12,000 cap only bites if you want most or all of your allowance in cash. The LISA (£4,000) and JISA (£9,000) limits are unchanged and fixed until 5 April 2031.

The practical headline for 2026/27: the current tax year, ending 5 April 2027, is the last one in which an under-65 can subscribe the full £20,000 to Cash ISAs. If cash is genuinely the right home for your money this year, that deadline matters — see the action list below and our best savings accounts guide for where rates currently sit.

Does the cap affect money already in my Cash ISA?

No. The £12,000 cap is a limit on new subscriptions — money you pay in during a tax year — not a limit on balances. Under the draft rules, everything you hold in Cash ISAs on 5 April 2027 stays exactly where it is: tax-free, uncapped and untouched. If you have £150,000 built up across Cash ISAs from years of subscriptions and interest, none of it needs to move, none of it is taxed, and it keeps compounding tax-free.

That is the structure of the draft statutory instrument: it amends the subscription limit in the ISA Regulations, and no published document proposes any charge, cap or forced transfer on existing balances. Do not withdraw existing Cash ISA money because of this reform. Taking it out of the wrapper is the one way to genuinely lose out, because from April 2027 an under-65 can only put £12,000 a year back in — the withdraw-and-redeposit mistake gets more expensive, not less.

One caveat sits alongside this: cash held inside a Stocks & Shares ISA is treated differently from April 2027, whatever year it went in — see the anti-circumvention rules below.

Can I still pay £20,000 into ISAs after April 2027?

Yes. The overall allowance stays at £20,000. What changes is the mix: an under-65 who wants to use the full allowance must put at least £8,000 of it somewhere other than a Cash ISA. In practice that means:

• Up to £12,000 into Cash ISAs (across one or more providers);
• At least £8,000 into a Stocks & Shares ISA or Innovative Finance ISA — both keep their full £20,000 limits, so you could equally put the whole £20,000 into investments;
• Lifetime ISA: under the draft rules as reported, LISA subscriptions (up to £4,000) sit inside the £20,000 overall allowance but outside the £12,000 cash cap — no gov.uk document states this in a single sentence, so treat it as provisional until the final regulations are laid;
• Junior ISAs are separate — the £9,000 JISA limit belongs to the child and is unaffected.

"Non-cash" does not have to mean equities. Money market funds — funds holding short-dated cash-like instruments — remain qualifying investments inside a Stocks & Shares ISA and are exempt from the new 22% charge. But the draft rules block the obvious all-cash portfolio: a Stocks & Shares ISA made up 100% of cash-like assets will be a non-qualifying investment, with the cash-like list defined in legislation and initially limited to money market funds. Partial MMF allocations are fine; a Cash ISA in a trench coat is not.

If you are new to the investing side, the complete UK ISA guide covers how the wrappers fit together, and the choice between them is exactly what our Cash ISA vs Stocks & Shares vs LISA guide works through.

Who is exempt from the Cash ISA cap?

Anyone aged 65 or over keeps the full £20,000 Cash ISA limit. The draft regulation works on your age at the end of the tax year, and HMRC's factsheet confirms the generous consequence: the £20,000 cash entitlement applies from the start of the tax year in which you turn 65. Turn 65 on 3 March 2028 and you can subscribe the full £20,000 to a Cash ISA from 6 April 2027 — eleven months before your birthday.

Over-65s also escape the transfer ban: draft regulation 21(4ZA)(d) permits transfers into a Cash ISA where the investor is 65 or over at the end of the year, so de-risking a Stocks & Shares portfolio into cash remains possible in later life. The one new rule that still reaches over-65s is the 22% charge on interest earned on cash held inside a Stocks & Shares ISA — that applies at every age.

If you are anywhere near the boundary, the timing rules reward precision — our over-65 exemption guide works through the turning-65 mechanics year by year.

What are the anti-circumvention rules?

Left alone, the cap would have an obvious workaround: subscribe £20,000 to a Stocks & Shares ISA, hold it as cash, then transfer it to a Cash ISA. HMRC's anti-circumvention factsheet closes every leg of that route. From 6 April 2027, under the draft rules:

• The transfer ban. Transfers from Stocks & Shares or Innovative Finance ISAs into Cash ISAs will not be permitted for under-65s. Cash ISA → non-cash transfers remain possible, and Cash → Cash transfers are not restricted by the new rules. No exemption for pre-2027 money has been published — as drafted, the ban covers Stocks & Shares money whenever it was subscribed. Until 5 April 2027, S&S → Cash transfers remain allowed for everyone, which makes this a real deadline for anyone planning to de-risk into cash. Full detail in the transfer ban guide.
• The 22% charge. A flat-rate charge of 22% will apply to any interest or alternative finance return paid on cash held within a non-Cash ISA. It applies at all ages — including 65+ — and in all tax bands, which makes it regressive for non-taxpayers who would owe nothing on the same interest outside a wrapper. The factsheet is explicit that it is permanent: the charge and the 100% cash-like prohibition "will remain in place". ISA managers will pay the charge to HMRC; you do not declare ISA interest yourself. No de minimis threshold and no "cash awaiting investment" exemption appear in any published document, and the administration mechanics — how and when managers calculate it — have not yet been published. JISAs are excluded from the charge under draft regulation 2D.
• The 100% cash-like prohibition. A Stocks & Shares ISA portfolio made up entirely of cash-like assets (initially defined as money market funds) will be non-qualifying, as covered above.

One further wrinkle for flexible ISA users: draft regulation 5DDB caps replacement subscriptions into a Cash ISA at the £12,000 limit where it applies. How that interacts with withdrawing and replacing prior-year money has not yet been explained in guidance — it is on our "still unknown" list below.

How much will the Cash ISA cap cost you?

For most savers, less than the headlines suggest in year one — and steadily more each year after. The honest arithmetic, remembering that the same Budget raised the basic savings-income rate from 20% to 22% from April 2027:

Worked example. You are under 65, a basic-rate taxpayer, and you want to save £20,000 a year in cash. From 2027/28 only £12,000 fits in the Cash ISA, so £8,000 a year is displaced into taxable savings paying 4.5%. Assume each £8,000 goes in at the start of the tax year, interest is paid out rather than reinvested, and your £1,000 Personal Savings Allowance is otherwise unused:

Year one costs you nothing: £360 of interest sits comfortably inside a fresh £1,000 PSA. But the taxable pot grows by £8,000 every year, and by year three the PSA is breached. Cumulative extra tax over five years: £290.40 — modest, but climbing every year and never going away. And that is the best case. If your PSA is already used up by other savings interest, every pound of displaced interest is taxed: £5,400 × 22% = £1,188 over the same five years. Higher-rate taxpayers get a £500 PSA and pay 42% from April 2027: £1,276.80 over the same five years with a fresh PSA, or £2,268 with it already used up.

Your own numbers depend on your rate band, existing savings and how much cash you actually hold — the Cash ISA cap calculator runs the projection for your situation, and the savings interest tax calculator shows where your PSA currently stands.

What should you do before 6 April 2027?

1. Use 2026/27's full £20,000 cash allowance if cash is right for you. This is the last tax year an under-65 can put £20,000 into Cash ISAs. The deadline is 5 April 2027, and allowances do not carry forward. "If cash is right for you" is doing real work in that sentence — money you will not need for 5+ years usually belongs invested — but if the money is genuinely short-term, fill the cash allowance while it exists.
2. Complete any planned S&S → Cash de-risking before 6 April 2027. If you are under 65 and intend to move Stocks & Shares ISA money into cash — approaching a house purchase, nearing retirement — the transfer route closes on 6 April 2027 with no published exemption for pre-2027 money. Stocks & Shares transfers routinely take 4–6 weeks, so do not leave this to March.
3. Do not withdraw existing Cash ISA money. Balances built up before April 2027 are protected. Withdrawing turns protected money into money that can only re-enter at £12,000 a year.
4. Check whether you turn 65 in 2027/28. If you turn 65 at any point between 6 April 2027 and 5 April 2028, the cap never applies to you — you get the full £20,000 cash limit from day one. The over-65 exemption page has the year-by-year detail.
5. Revisit whether some of the £8,000 should be invested anyway. The cap is a shove, but for long-term money it points in a sensible direction: cash loses to inflation over long horizons. Work through how to choose between Cash, S&S and LISA before defaulting to taxable savings accounts.

Why is the government capping Cash ISAs?

The stated aim is to push more of Britain's savings into productive investment. The government's position, set out at the Budget and in the consultation documents, is that too much long-term money sits in cash earning below-inflation returns, and that redirecting part of the ISA incentive toward equities will leave savers better off over time while deepening UK capital markets.

The criticism has been loud. Martin Lewis and MoneySavingExpert called the cap the "wrong move", arguing that capping cash does not make anyone invest — it simply pushes cautious savers into taxable savings accounts or leaves money in current accounts, while cutting a cheap funding source for building societies that lend it out as mortgages. Consumer groups and building societies publicly made the same case while the consultation was open. The government's reported counter is that most cash savers subscribe well under £12,000 a year, so the limit still covers the large majority. Both things can be true: the typical saver will not notice the cap, and the minority who save heavily in cash will pay the tax drag calculated above.

Will the Autumn Budget 2026 change any of this?

Possibly — and this is the last realistic window for change. The consultation on the draft regulations closed on 2 August 2026 and HMRC is analysing responses. The final regulations are due to be laid in Parliament in the autumn, around the Autumn Budget on 28 October 2026. That is when we will learn whether the government softens anything: the transfer ban's treatment of pre-2027 money, a de minimis for the 22% charge, and the flexible ISA mechanics are the likeliest candidates for adjustment, since all three drew consultation criticism. Wholesale retreat from the £12,000 figure looks unlikely given how firmly it was announced. We track every ISA-related announcement as it lands in the Autumn Budget 2026 tracker, and this page will be updated the day the final regulations are published.

What we still don't know

Four genuine gaps remain in the published material, all flagged in HMRC's Tax-free savings newsletter 22 era documents or simply absent from them:

• Flexible ISA prior-year replacements. Draft regulation 5DDB caps replacement subscriptions at £12,000 where the cash limit applies, but guidance has not explained how withdrawing and replacing prior-year money works in practice.
• Help to Buy ISA treatment. Not addressed in any published document. We will not guess.
• 22% charge administration. ISA managers pay the charge to HMRC, but the calculation basis and timing have not been published.
• The consultation response. Feedback from the 25 June – 2 August 2026 consultation is still being analysed; the government's formal response and any resulting changes arrive with the final regulations in autumn 2026.