What you need to know: the over-65 exemption to the Cash ISA cap
Quick answer: Under the draft rules taking effect on 6 April 2027, savers aged 65 or over at the end of the tax year keep the full £20,000 annual Cash ISA subscription limit; everyone younger is capped at £12,000.…
Key points:
- The age test is your age on the last day of the tax year — turn 65 at any point in 2027/28 and the full £20,000 applies from 6 April 2027, months before your birthday.
- Over-65s also escape the ban on transferring Stocks & Shares ISA money into Cash ISAs — but not the 22% charge on interest earned on cash held inside investment (non-cash) ISAs.
Under the draft ISA rules taking effect on 6 April 2027, savers who are 65 or over at the end of the tax year keep the full £20,000 annual Cash ISA subscription limit, while everyone younger is capped at £12,000. The test is your age on the last day of the tax year — so if you turn 65 at any point during 2027/28, you get the full £20,000 cash limit from 6 April 2027, potentially months before your birthday. The exemption also lifts the new ban on transferring Stocks & Shares ISA money into a Cash ISA.
What is the over-65 exemption to the Cash ISA cap?
At Autumn Budget 2025 (26 November 2025) the government announced that from 6 April 2027 the annual Cash ISA subscription limit falls from £20,000 to £12,000 for savers under 65. The overall annual ISA allowance stays at £20,000, and the Stocks & Shares and Innovative Finance subscription limits stay at £20,000 — so an under-65 who wants to use the full allowance must put at least £8,000 into non-cash ISAs. The full mechanics of the cap are covered in our Cash ISA cap 2027 guide; this page deals with the one group the cap does not touch.
That group is savers aged 65 and over. HMRC's ISA reform 2027 factsheet (published 23 June 2026) states that the £20,000 cash entitlement "will apply from the start of the tax year in which an individual turns 65". The draft legislation delivers this through new regulation 4ZA(1C), which caps the younger group rather than exempting the older one:
"In any year in which a qualifying individual is 64 or under at the end of that year, the subscription limit in relation to a cash account is £12,000."
Read that carefully: the £12,000 cap only bites if you are 64 or under at the end of the tax year. Anyone who is 65 or over on 5 April at the end of the year simply keeps the default £20,000 cash limit. Two other points follow directly from how the draft regulations are built:
- Existing balances are untouched at every age. The cap is a limit on new subscriptions each year, not on what you hold. Money already inside Cash ISAs before 6 April 2027 stays where it is and keeps earning tax-free interest — nobody has to move anything.
- Nothing changes before 6 April 2027. In 2026/27 (which ends 5 April 2027) every adult, at any age, can still put the full £20,000 into Cash ISAs.
| Tax year and saver | Cash ISA limit | Overall ISA allowance |
|---|---|---|
| 2026/27 — everyone | £20,000 | £20,000 |
| 2027/28 onwards — 64 or under at the end of the tax year | £12,000 | £20,000 |
| 2027/28 onwards — 65 or over at the end of the tax year | £20,000 | £20,000 |
I turn 65 during the tax year — what is my Cash ISA limit?
This is the question the draft rules answer more generously than most people expect. The age test is not your age on the day you subscribe — it is your age at the end of the tax year, 5 April. If you turn 65 at any point during a tax year, you are 65 "at the end of that year", so the £12,000 cap never applies to that year. In practice, the full £20,000 cash limit switches on from 6 April at the start of the tax year in which your 65th birthday falls — which can be up to a year before the birthday itself.
For the first capped year, 2027/28 (6 April 2027 to 5 April 2028), that produces a single clean dividing line: you escape the cap for 2027/28 if you turn 65 on or before 5 April 2028 — that is, if you were born on or before 5 April 1963.
| Date of birth | 65th birthday falls in | 2027/28 cash limit | Full £20,000 from |
|---|---|---|---|
| On or before 5 April 1962 | Before 2027/28 starts | £20,000 | Already exempt |
| 6 April 1962 – 5 April 1963 | 2027/28 itself | £20,000 | 6 April 2027 |
| 6 April 1963 – 5 April 1964 | 2028/29 | £12,000 | 6 April 2028 |
| 6 April 1964 or later | 2029/30 or later | £12,000 | 6 April of the tax year containing the 65th birthday |
Three worked examples make the boundary concrete:
- Margaret, 65 in May 2027. Born 20 May 1962, she turns 65 on 20 May 2027 — during 2027/28. She gets the full £20,000 cash limit from 6 April 2027, six weeks before her birthday. She could pay £20,000 into a Cash ISA in April 2027 while still 64.
- David, 65 in March 2028. Born 12 March 1963, he is 64 for more than eleven months of 2027/28 — but he is 65 on 5 April 2028, the last day of the year. The £12,000 cap never applies to him: he gets the full £20,000 from 6 April 2027, roughly eleven months before he turns 65.
- Paul, 65 in June 2028. Born 10 June 1963, he is still 64 when 2027/28 ends on 5 April 2028. He is capped at £12,000 cash for 2027/28. From 6 April 2028 — the start of 2028/29, the year containing his birthday — he gets the full £20,000, two months before he actually turns 65.
Note what Paul does not lose: his overall allowance in 2027/28 is still £20,000. He can put £12,000 into cash and £8,000 into a Stocks & Shares ISA — see our guide to choosing between Cash, Stocks & Shares and Lifetime ISAs — or model his own numbers with the Cash ISA cap calculator.
What should savers near 65 do before April 2027?
The planning position depends entirely on which side of the 5 April 1963 line your birthday falls.
- Born on or before 5 April 1963: the cap will never apply to you. You do not need to do anything, accelerate anything, or restructure anything because of the £12,000 limit. Your only genuinely new consideration is where you hold cash from April 2027 (see the 22% charge below).
- Born after 5 April 1963: you face at least one capped year. The current tax year, 2026/27, is the last one in which any under-65 can put the full £20,000 into Cash ISAs — it ends on 5 April 2027. If you hold cash outside an ISA and want it sheltered as cash, using this year's full allowance is the last unrestricted chance; our best UK savings accounts guide tracks the current Cash ISA rates. From 2027/28 you can add £12,000 a year to cash until the tax year you turn 65, then the full £20,000 returns.
Either way, the arithmetic is worth doing calmly rather than in a March 2027 rush. Someone born in June 1963, for example, faces exactly one capped year (2027/28) — a maximum of £8,000 of cash subscriptions deferred by a single year, or redirected into a Stocks & Shares ISA. The complete UK ISA guide covers how the allowances fit together.
Does the over-65 exemption cover ISA transfers too?
Yes — and for many older savers this matters more than the subscription limit itself.
From 6 April 2027, the draft rules ban under-65s from moving investment money into cash inside the ISA wrapper. The factsheet is blunt: "Transfers from non Cash ISAs into Cash ISAs will not be permitted". The reverse direction stays open — "It will remain possible to transfer from a Cash ISA to a non Cash ISA" — and Cash-to-Cash transfers between providers are not restricted by anything announced. We cover the ban in full in our Stocks & Shares to Cash ISA transfer ban guide.
Over-65s are carved out of the ban entirely. Draft regulation 21(4ZA)(d) permits a transfer to "a cash account (if the account investor is 65 or over at the end of the year)". It is the same year-end age test as the subscription limit: turn 65 at any point in a tax year and you can transfer Stocks & Shares ISA money into a Cash ISA throughout that year, birthday or not.
For someone in their early 60s planning to de-risk out of shares and into cash — a classic pre-retirement move — that leaves two clean options under the draft rules:
- Act before 6 April 2027. Until 5 April 2027, Stocks & Shares to Cash ISA transfers remain allowed for everyone, at any age. That is a real deadline for anyone who wants cash sooner than their 65th tax year.
- Wait for the tax year you turn 65. From 6 April of that year, the transfer route reopens for you personally — no cap, no ban.
One thing to be clear about: no exemption for pre-2027 money has been published. Investment money you already hold on 6 April 2027 has no special "old money" transfer route into cash if you are under 65 — the ban applies to the transfer, whenever the money was subscribed. The standard transfer process itself (receiving provider initiates, never withdraw-and-redeposit) is unchanged — see the ISA transfer rules guide.
A related wrinkle for flexible ISA users: under draft regulation 5DDB, replacement subscriptions into a cash account "must not exceed the subscription limit in regulation 4ZA(1C)" — the £12,000 cap — where that cap applies. Over-65s are again outside this, but for under-65s the guidance has not yet explained how replacing prior-year flexible withdrawals will work in practice. That mechanic is one to watch in the final regulations.
What do over-65s not escape?
The exemption covers the subscription cap and the transfer ban. It does not cover the new charge on cash parked inside investment ISAs — and this catches over-65s exactly as it catches everyone else.
From 6 April 2027, per the factsheet, "a flat-rate charge (22%) will apply to any interest or alternative finance return paid on cash held within a non Cash ISA". Three things about this charge:
- It applies at every age. The factsheet states that "The charge on interest earned on cash held in non Cash ISAs and the prohibition on 100% cash-like investments will remain in place" — it is permanent and does not switch off at 65.
- It applies at every tax band — 22% flat whether you are a non-taxpayer, basic-rate or additional-rate. For a non-taxpayer it is genuinely regressive: interest that would have been tax-free even outside an ISA gets charged 22% inside a Stocks & Shares ISA.
- You do not pay it yourself. The factsheet says "ISA managers will pay the charge to HMRC - individuals are not required to declare to HMRC any interest paid on an ISA". The calculation basis and timing have not yet been published, and no de minimis threshold or "cash awaiting investment" exemption appears in any published document.
The arithmetic makes the point. A 70-year-old holding £15,000 of cash inside a Stocks & Shares ISA at 4% earns £600 of interest a year — and under the draft rules would suffer a charge of £600 × 22% = £132. The same £15,000 in an actual Cash ISA earns the same £600 with no charge at all, and an over-65 has a full £20,000 of annual cash headroom to get it there. The moral for over-65s is simple: if you want cash, hold it in a Cash ISA, not as a cash balance inside your investment ISA.
Money market funds are the one published carve-out: they are exempt from the 22% charge and remain qualifying investments — but only as part of a portfolio. The factsheet warns that "Non Cash ISA portfolios made up of 100% cash-like assets will be non-qualifying investments", and says the cash-like list "will be provided in legislation. Initially this will be limited to Money Market Funds".
Two pieces of context sit behind the 22% figure. Autumn Budget 2025 also raised the tax rates on savings income outside ISAs by 2 percentage points from April 2027 — basic 20% to 22%, higher 40% to 42%, additional 45% to 47% — so the flat ISA charge simply matches the new basic savings rate. The Personal Savings Allowance stays at £1,000 basic / £500 higher / £0 additional; you can check what your non-ISA interest will cost with the savings interest tax calculator. Junior ISAs are excluded from the 22% charge under draft regulation 2D, and the JISA (£9,000) and LISA (£4,000) limits are unchanged and fixed until 5 April 2031.
How will providers know my age?
The draft regulations set the age test but say nothing about how it will be verified or administered — no new age-verification process has been published. In practice this is less of a gap than it sounds: ISA managers already collect your date of birth and National Insurance number when you open an account, because ISA eligibility has always been age-gated and subscriptions are reported to HMRC each year. Expect providers to apply the correct limit (£12,000 or £20,000) automatically from the date of birth on file, with HMRC's existing year-end reporting picking up over-subscriptions across providers as it does today.
What has not been published is the operational detail: how systems will handle the year you become exempt, how the transfer carve-out will be evidenced between two providers, and how flexible ISA replacements interact with the cap. HMRC communicates this sort of mechanics to ISA managers through its Tax-free savings newsletters — newsletter 22 (June 2026) accompanied the consultation launch — so expect the administration to be spelled out there and in guidance alongside the final regulations in autumn 2026.
How does the exemption work for couples?
The exemption is individual — there is no household or spousal test. Each person's limit turns on their own age at the end of the tax year, which produces some sharp differences inside one household.
Take Brian, 66, and Carol, 60, in 2027/28. Brian can subscribe the full £20,000 to Cash ISAs. Carol is capped at £12,000 cash; to use her full £20,000 allowance she must put the remaining £8,000 into a Stocks & Shares or Innovative Finance ISA. Between them they can shelter £32,000 of new cash in 2027/28 — against £40,000 under today's rules, and £40,000 again once Carol reaches the tax year she turns 65.
For couples holding household cash savings, the practical consequence is that more of the household's cash can be directed to the older partner's Cash ISA. One standard caution applies: an ISA is legally an individual account, so money paid into your spouse's ISA becomes your spouse's money outright — a point that matters more than tax in some circumstances.
Inheritance is untouched by anything announced. The Additional Permitted Subscription (APS) — the extra allowance a surviving spouse or civil partner receives on top of their own — is not mentioned in the published draft regulations — nothing published proposes any change to it or to the tax-free status of inherited ISA balances.
Why did the government exempt the over-65s?
The official documents state the exemption without explaining it. The Budget 2025 Overview of Tax Legislation and Rates and the 2026 factsheet both set out the £12,000 limit and the age 65 carve-out as fact, with no published rationale for the age line.
The reasoning reported at the time of the Budget — by Which? and other coverage, not by gov.uk — is about access: older savers are more likely to rely on cash savings for everyday living costs, and the policy goal of nudging long-horizon savers towards investment makes little sense for people already in or at retirement, for whom a forced shift into shares could mean selling in a downturn to fund spending. The cap's stated purpose is to encourage investment; the exemption recognises the group for whom that nudge is least appropriate. Treat that explanation as reported commentary rather than official policy text.
Could the over-65 exemption still change?
Yes. Nothing on this page is law yet. The draft Individual Savings Account (Amendment) Regulations 2026 went through technical consultation from 25 June to 2 August 2026; the consultation is closed and HMRC is analysing the feedback. The final regulations are due to be laid in Parliament in autumn 2026 and to come into force on 6 April 2027.
The specific things most likely to move between draft and final:
- The age-test wording. The end-of-tax-year test in regulation 4ZA(1C) is the single most consequential drafting choice on this page — a shift to a birthday-based test in the final SI would change every date in the table above. We will update this page if it moves.
- Administration mechanics. How the 22% charge is calculated and timed, how flexible ISA replacements work, and how transfers evidence the age carve-out are all unpublished.
- The politics. The Autumn Budget on 28 October 2026 lands before the regulations take force — our Autumn Budget 2026 tracker follows anything that touches the ISA package.
The review date at the top of this page shows when it was last verified against the published draft regulations, factsheet and consultation documents.
Sources and methodology
Every rule on this page is drawn from four primary documents: HMRC's ISA reform 2027: anti-circumvention rules factsheet (23 June 2026), the draft Individual Savings Account (Amendment) Regulations 2026 consultation, the Budget 2025 OOTLAR, and Tax-free savings newsletter 22 (June 2026). Where a point rests on the structure of the draft regulations or on reported commentary rather than an explicit gov.uk sentence, the text says so. The methodology page documents how we source and verify figures.
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