UK to Cut Cash ISA Allowance to £12,000 From April 2027

The UK government has confirmed that from 6 April 2027, the tax-free Cash ISA contribution allowance will fall from £20,000 to £12,000 a year, while Stocks and Shares and Innovative Finance ISAs keep the full £20,000 limit.

What stays the same until then

The overall £20,000 ISA allowance is unchanged for both the 2025/26 and 2026/27 tax years — meaning the current tax year is effectively the last full opportunity for younger savers to put the maximum £20,000 into a Cash ISA specifically before the lower cap applies. Savers aged 65 and over keep the full £20,000 Cash ISA allowance even after the 2027 change.

Why the government is making the change

The stated goal is encouraging a shift from cash savings toward stocks and shares investment, which is unaffected by the new lower cap. From 2027/28 onward, transfers from Stocks and Shares ISAs into Cash ISAs will also no longer be permitted, reinforcing the same direction.

What savers can do before the change

Anyone who prefers cash savings and wants to preserve the ability to shelter more of it from tax has a defined window — this tax year and next — to make full use of the current £20,000 Cash ISA allowance before it drops. Cash ISA rules also now allow opening and contributing to multiple Cash ISAs with different providers in the same tax year, adding some flexibility ahead of the reduced cap.