Last updated: 16 October 2026
What are the ISA reforms?
From 6 April 2027, the cash ISA limit for savers under 65 falls to £12,000 a year, although the overall ISA allowance stays at £20,000. Savers under 65 can put the remaining £8,000 into stocks and shares ISAs, but not cash. Those aged 65 and over keep the full £20,000 for cash. The changes aim to encourage investment in shares. At the same time, tax on savings interest outside ISAs rises by 2 percentage points from April 2027, which makes ISAs more valuable.
The new limits
| Saver | Overall ISA limit | Cash ISA limit from April 2027 |
| Under 65 | £20,000 | £12,000 |
| 65 and over | £20,000 | £20,000 |
| Lifetime ISA (18–39) | £4,000, within the £20,000 | Unchanged |
| Junior ISA | £9,000 | Unchanged |
Savings tax from April 2027
- Basic rate on savings: 22%
- Higher rate: 42%
- Additional rate: 47%
- Personal savings allowance unchanged: £1,000 basic rate, £500 higher rate
What to do before April 2027
- Use this year’s £20,000 allowance, including up to £20,000 in cash if that suits you.
2. Check how much interest you earn outside ISAs.
3. Consider moving savings into ISAs gradually.
4. Think about stocks and shares ISAs for long-term money.
5. Use a spouse’s allowance too.
Example
Neil, aged 45 and a higher rate taxpayer, has £60,000 in a savings account earning 4%, or £2,400 a year. £500 is covered by his allowance, so £1,900 is taxed. At 40% that’s £760, rising to £798 at 42% from April 2027. If he moves £20,000 a year into a cash ISA before the limit falls, and then £12,000 a year, he can shelter most of his savings within a few years.
Transfers between ISAs
You can still transfer existing ISA savings between providers. Rules on transfers from stocks and shares to cash ISAs for under-65s are being tightened, so check before moving.
Common mistakes
- Paying into two cash ISAs in one year above the limit
- Withdrawing from a non-flexible ISA and losing the allowance
- Forgetting interest is taxable above the allowance
- Missing the 5 April deadline
Records to keep
Keep annual ISA statements and interest certificates for non-ISA accounts.
Stocks and shares ISAs
Investments held in a stocks and shares ISA are free of income tax on dividends and interest and free of CGT when sold. With the dividend allowance only £500 and dividend tax at 10.75% and 35.75%, sheltering shares in an ISA is increasingly worthwhile. The value can fall as well as rise, so this suits money you can leave for at least five years.
Starting rate for savings
If your non-savings income is below £17,570, up to £5,000 of interest may be taxed at 0%. People on low incomes or in retirement may not need an ISA for their cash at all, so check before moving money.
Frequently asked questions
Can I have more than one ISA?
Yes, you can pay into several in one year since 2024.
Is ISA income on my tax return?
No.
Does the £12,000 limit apply to Lifetime ISAs?
The LISA remains £4,000.
What happens to ISAs on death?
They can continue as a continuing account of a deceased investor, and the spouse gets an extra allowance.
Inheritance tax
ISAs aren’t exempt from IHT, so they still count towards your estate.
Related: tax implications of ISAs, using your cash ISA allowance and tax on savings interest.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with ISA and savings tax planning. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
