ISA changes April 2027: Cash ISA limits, the 22% charge and transfer rules explained

Perspective

ISA rules change from 6 April 2027: a lower Cash ISA limit for under-65s, a 22% charge on cash in Stocks and Shares ISAs and new transfer rules.

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12 October 2026 | 7 minute read

Please note: at the time of writing, these changes are still at draft stage and may be refined before they take effect. We will keep you updated if anything material changes.

The government is introducing a package of changes to Individual Savings Accounts (ISAs) that will take effect from 6 April 2027.

If you have seen headlines about “the end of the Cash ISA” or new taxes on your savings, it is worth taking a breath. The reality is more measured: the overall £20,000 annual ISA allowance is staying exactly where it is, your existing Cash ISA balances are protected and for most clients the practical impact is small.

These changes are part of the government’s wider aim to build a stronger retail investment culture in the UK, encouraging longer-term investing rather than cash saving. The UK currently has the lowest level of retail investment among G7 nations, and the reforms are intended to help savers earn better returns over time while supporting UK businesses.1

Below we set out what is actually changing, who is affected and what, if anything, you need to do.

What exactly is changing from 6 April 2027?

Before (to 5 April 2027)From 6 April 2027
Annual ISA allowance£20,000£20,000 (unchanged)
Cash ISA subscription limit£20,000£12,000 if you are under 65; £20,000 if you are 65 or over (the £20,000 applies from the start of the tax year in which you turn 65)
Interest on cash held in a Stocks and Shares ISATax-freeA 22% flat-rate charge, deducted at source
Transferring from a Stocks and Shares ISA to a Cash ISAAllowedNot allowed, unless you are 65 or over
Transferring from a Cash ISA to a Stocks and Shares ISAAllowedStill allowed
Money market funds in a Stocks and Shares ISAEligibleEligible, but a Stocks and Shares ISA held 100% in money market funds becomes non-qualifying
Junior ISAs—Unaffected

What are the key ISA changes from April 2027?

1. What is the new Cash ISA subscription limit?

From 6 April 2027, the annual Cash ISA subscription limit for under-65s falls from £20,000 to £12,000. Your overall ISA allowance stays at £20,000, so the remaining £8,000 simply needs to be subscribed to another type of ISA, such as a Stocks and Shares ISA, if you want to use the full allowance. If you are 65 or over, or you turn 65 at any point during the tax year, your Cash ISA limit remains at £20,000.

Importantly, this only affects new contributions from April 2027. Existing Cash ISA balances are protected, and the current 2026/27 tax year is the last full year under the existing rules, so you can still deposit up to £20,000 into a Cash ISA this tax year if you are under 65.

2. How does the 22% charge on cash in a Stocks and Shares ISA work?

To discourage investors from using a Stocks and Shares ISA simply as a place to hold cash, interest earned on uninvested cash balances within a Stocks and Shares ISA will be subject to a 22% flat-rate charge. This mirrors the new basic-rate savings income tax rate that applies from the same date. The charge will be automatically deducted at source and paid to HMRC on your behalf through existing reporting, so there is no extra reporting for you to do and no need to declare anything on a self-assessment. There are no exemptions for cash held to cover fees or pending trades; where interest is credited, the charge applies. This includes interest on cash already held in a Stocks and Shares ISA before April 2027. This charge applies regardless of your age.

3. What are the new rules on ISA transfers and money market funds?

Two further measures prevent the new limits from being sidestepped:

  • Transfers: You will no longer be able to transfer from a Stocks and Shares ISA (or an Innovative Finance ISA) into a Cash ISA, unless you are 65 or over. Transferring the other way, from a Cash ISA into a Stocks and Shares ISA, remains unaffected for everyone.
  • Money market funds: These remain eligible investments, but a Stocks and Shares ISA held entirely in money market funds will be treated as non-qualifying. Where this happens, there is a 30-day window to rebalance by selling down or moving the assets out. This rule also applies regardless of age.

4. Who do the 2027 ISA changes not apply to?

  • Clients aged 65 or over (including those who turn 65 during the tax year) keep a £20,000 Cash ISA limit and can still transfer from a Stocks and Shares ISA to a Cash ISA.
  • Junior ISAs are unaffected by any of these changes.
  • Existing Cash ISA balances are protected. The new £12,000 limit applies to new contributions from April 2027 onwards, not to money already in your Cash ISA.
  • Existing investments in a Stocks and Shares ISA are unaffected. However, the 22% charge applies to interest on any uninvested cash held in a Stocks and Shares ISA from 6 April 2027, including cash deposited before that date. 
  • Transfers from Cash ISAs to Stocks and Shares ISAs continue as normal.

Note: The 22% charge and the rule on 100% money market fund holdings apply to all ages, including those 65 and over.

Do you need to take any action before April 2027?

For most clients, the answer is no immediate action is required. These changes do not take effect until April 2027, and your current arrangements remain in place.

Depending on your individual circumstances, you may wish to think about:

  • Whether you want to make full use of the current tax year’s £20,000 Cash ISA allowance before the limit reduces.
  • How you might split your annual allowance between cash and investing from April 2027, for example, £12,000 in a Cash ISA and £8,000 in a Stocks and Shares ISA.
  • Whether your portfolio holds large uninvested cash balances or money market funds inside a Stocks and Shares ISA, which could be affected by the new charge or eligibility rules.

You do not need to work any of this out on your own.

How can your wealth manager help you plan for the ISA changes?

Changes like these can sound more alarming in the headlines than they are in practice. Your ISA allowance is not disappearing, your existing savings are safe and the steps involved are straightforward.

As always, your wealth manager is on hand to talk through how these changes apply to your own circumstances and to help you plan with confidence. If you would like to review your ISA arrangements or have any questions, please do get in touch.

The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.

1Leeds Reforms to rewire financial system, boost investment and create skilled jobs across UK, gov.uk, July 2025

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