The Autumn 2025 Budget announced a significant change to the Cash ISA subscription limit, and whilst the change does not take effect until April 2027, it is worth understanding now because the current tax year may represent the final opportunity for some savers to use the existing allowances in their existing form. Here is what is changing, what is staying the same, and the factual picture as it stands at the start of the 2026/27 tax year.
The Current Rules for the 2026/27 Tax Year
The total ISA allowance for the 2026/27 tax year remains at £20,000 per person, which has been the position since 2017/18. This allowance can be split across Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs and Lifetime ISAs in any combination, subject to the Lifetime ISA sub limit of £4,000. The tax year began on 6 April 2026 and runs until 5 April 2027, and any unused allowance cannot be carried forward into the following year.
Junior ISAs sit separately with their own £9,000 annual allowance and do not affect the adult limit. Each adult has their own allowance, which means a couple can collectively contribute up to £40,000 across their respective ISAs in any given tax year, subject to each individual using only their own allowance.
What Is Changing From April 2027
From 6 April 2027, the Cash ISA subscription limit for savers aged under 65 will reduce from £20,000 to £12,000. The remaining £8,000 of the overall £20,000 allowance will need to be subscribed to other ISA types, including Stocks and Shares ISAs, Innovative Finance ISAs or Lifetime ISAs, if savers wish to use the full annual allowance.
Savers aged 65 and over on 6 April 2027 will retain access to the full £20,000 Cash ISA allowance. The change applies only to new subscriptions from April 2027 onwards, so existing Cash ISA balances built up under the previous rules are not affected by the new limits.
The Wider Tax Context
Several other changes have come into effect or are scheduled to come into effect alongside the Cash ISA reform. From 6 April 2026, the basic and higher rates of dividend tax on income outside of an ISA or pension wrapper rose by two percentage points, taking the basic rate to 10.75% and the higher rate to 35.75%. The additional rate remains at 39.35%. The dividend allowance, which is the amount of dividend income receivable before tax applies, remains at £500.
From 6 April 2027, tax on savings interest outside an ISA is also scheduled to increase by two percentage points across all bands, with the basic rate rising to 22%, the higher rate to 42% and the additional rate to 47%. The Personal Savings Allowance remains unchanged at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, with no allowance for additional rate taxpayers.
Who the Changes May Affect
The 2027 Cash ISA reduction will most directly affect savers under 65 who currently use most or all of their £20,000 allowance in cash form. For those who already split their allowance across cash and other ISA types, the practical impact may be smaller. For those who hold significant savings outside ISA wrappers, the upcoming increase in savings tax from April 2027 alongside the increased rates of dividend tax already in effect may make the use of available allowances more relevant than in previous years.
Whether and how to respond to these changes depends entirely on individual circumstances, including age, income, existing savings, attitude to risk, time horizon and overall financial objectives, and there is no universally correct response that applies to everyone.
Speaking to an Adviser
If you would like to review how the upcoming changes interact with your wider financial picture, our team can help you understand the options available and how they may apply to your circumstances. Reviews of this kind are particularly relevant ahead of fixed deadlines, where the available choices can change once the date passes.
Appletree Financial Services
Helping clients review their financial options with clear, professional advice.
An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
For specialist tax advice, please refer to an accountant or tax specialist
Please note, we do not advise on Innovative ISA’s.
Approved by The Openwork Partnership on 20/5/26
