Why 2026/27 Is Your Last Full-Allowance Year for Cash ISAs Before the 2027 Cut

We’ve covered this change in fuller detail in our ISA & SIPP tax planning series - this is the shorter, savings-focused version for anyone reading the Saving pillar first. If you’re an active saver and haven’t thought about your Cash ISA allowance this year, this is genuinely one of the more time-sensitive things in this whole series.

What’s changing, in brief

From 6 April 2027, anyone under 65 will only be able to put £12,000 of their overall £20,000 ISA allowance into a Cash ISA - the remaining £8,000 must go into a Stocks & Shares ISA or Innovative Finance ISA to remain tax-free. This was confirmed at the Autumn Budget on 26 November 2025. Savers aged 65 and over keep the full £20,000 Cash ISA allowance with no change.

Why 2026/27 is the year to act

The current rules apply for the whole of the 2026/27 tax year, running to 5 April 2027. This is the last full tax year where an under-65 saver can put the entire £20,000 allowance into cash if they choose to. After that, the cash portion drops by 40%, permanently, unless the rules change again.

What this doesn’t affect

• Money already in a Cash ISA from previous years keeps its tax-free status regardless of the new rules - this only limits new contributions from April 2027 onwards.
• Anyone 65 or older at the time of the change, who keeps the full £20,000 cash allowance indefinitely.
• Your overall £20,000 ISA allowance, which stays the same - it’s only the cash portion of it that’s being capped.
• Junior ISAs, which run on their own separate £9,000-a-year allowance for children and aren’t touched by this adult ISA change at all.

A simple way to think about it

If you have significant cash savings and strongly prefer the safety of cash over investment risk, using more of this tax year’s and next tax year’s Cash ISA allowance now - while the full £20,000 cash limit still applies - locks in the old, more generous rules before they change. There’s no requirement to use the full allowance in one go, and no penalty for using less; the only thing that changes is the ceiling on how much new cash can go in tax-efficiently from April 2027.

The bottom line

This is one of the more concrete, dated changes in this entire series - not speculation about a future Budget, but a confirmed rule already in law. If cash savings are a priority for you, 2026/27 is the year to make full use of the current allowance before it shrinks.