The Cash ISA Cut Is Coming in April 2027 — Here's How to Use Your Full £20,000 Now

If you’ve got cash sitting in a savings account rather than a Cash ISA, this is the year to move it. From 6 April 2027, the rules change — and for most people under 65, the amount you can shelter in a Cash ISA is about to shrink by 40%.

What’s actually changing

Right now, and for the whole of the 2026/27 tax year (6 April 2026 to 5 April 2027), the overall ISA allowance is £20,000, and you can put all of it into a Cash ISA if you want to.

From 6 April 2027, that changes for anyone under 65:

• The overall ISA allowance stays at £20,000
• But only £12,000 of it can go into a Cash ISA
• The remaining £8,000 has to go into a Stocks & Shares ISA (or Innovative Finance ISA) if you want to use your full allowance tax-free
• If you’re 65 or over, none of this applies to you — you keep the full £20,000 Cash ISA allowance

This was announced at the Autumn Budget on 26 November 2025 and confirmed in the following Budget documents. It’s designed to nudge more of the nation’s cash savings into investments, but for anyone who prefers the safety of cash, it’s a real cut to how much can be saved tax-free.

Why this tax year matters more than usual

Because the current rules run until 5 April 2027, 2026/27 is the last full tax year where an under-65 saver can put the entire £20,000 into cash and shelter all of it from tax. Do that this year and you can lock away up to £20,000 of tax-free cash savings before the lower limit lands.

After April 2027, if you want to keep saving more than £12,000 a year tax-efficiently, the rest has to go into stocks and shares — which carries investment risk that cash doesn’t.

What this means depending on your situation

If you’re under 65 and have spare cash to save: Consider using more of this year’s and next year’s Cash ISA allowance now, while the full £20,000 cash limit is still available. Any money already in a Cash ISA from previous years keeps its tax-free status regardless of the new rules — this only affects new contributions from April 2027 onwards.

If you’re 65 or over: Nothing changes for you. You’ll continue to have the full £20,000 Cash ISA allowance available every tax year.

If you don’t have £20,000 spare: This doesn’t mean you’re losing anything you already have — it only limits how much new money you can add to a Cash ISA each year from 2027. Prioritise using your allowance for whatever you can afford; there’s no minimum contribution.

Why it matters even if you don’t use ISAs at all

Two other 2026/27 changes make ISAs more valuable generally, even for smaller savers:

• The Personal Savings Allowance hasn’t changed, but frozen income tax thresholds mean more people are being pulled into higher tax bands — so more savers are losing part of their allowance without realising it.
• Dividend tax rates outside an ISA rose from April 2026 — the basic rate went from 8.75% to 10.75%, and the higher rate from 33.75% to 35.75%. If you hold shares or funds outside an ISA, this is another reason to prioritise using your ISA wrapper for new investments.

The bottom line

You don’t need to rush a decision about stocks and shares versus cash. But if you’ve been putting off opening or topping up a Cash ISA, the 2026/27 tax year is the moment to act on the old, more generous rules before the £12,000 cash cap arrives in April 2027.