Cash ISA Allowance Cut to £12,000: What Under-65s Should Do Before April 2027

If you're under 65, the amount you can pay into a Cash ISA drops from £20,000 to £12,000 a year from 6 April 2027. It was announced in the November 2025 Budget, and it's the first cut to the cash limit since 2017.

Here's the part most headlines skip: the overall £20,000 ISA allowance isn't changing, your existing savings are untouched, and you still have until April 2027 to use the full cash limit. This guide covers exactly what's changing, what isn't, and the sensible moves to make now.

What's actually changing (and what isn't)

Changing: from 6 April 2027, new Cash ISA contributions are capped at £12,000 per tax year if you're under 65.

Not changing:

• The overall ISA allowance stays at £20,000 — the other £8,000 can go into a Stocks and Shares ISA (or other ISA types).
• Money already in your Cash ISA is unaffected, keeps growing tax-free, and doesn't count against any new limit.
• Over-65s keep the full £20,000 cash limit.
• Nothing changes for the current tax year or 2026/27 — the full £20,000 into cash is still allowed until April 2027.

The Government's stated aim is to nudge savers toward investing. Whether that's right for you depends on what the money is for — more on that below.

The timeline that matters

1. Now to 5 April 2027: business as usual. You can still shelter up to £20,000 a year in cash.
2. From 6 April 2027: new cash contributions capped at £12,000 (under-65s). To use your full £20,000 allowance, at least £8,000 would need to be invested rather than saved in cash.

If you're a committed cash saver, there's a real (if unexciting) move here: use the bigger cash limit while it exists. Maxing cash contributions in 2026/27 is the last chance to put £20,000 of new money into a Cash ISA.

Cash or investments: the honest framing

The cut doesn't make investing automatically right. The boring rule still applies:

• Keep in cash: your emergency fund and anything you'll need within ~5 years (house deposit, wedding, car). Cash ISA rates in mid-2026 are still decent — around 4–4.8% AER at app-based providers.
• Consider investing: money you won't touch for 5+ years. Over long periods, global stock market returns have historically beaten cash — with the crucial caveat that investments fall as well as rise and past performance doesn't guarantee anything.

If most of your £20,000 was going into cash "by default" rather than by plan, the 2027 cut is a reasonable prompt to split it deliberately.

How to move Cash ISA money into investments — without losing the wrapper

This is where people get burned, so read this twice:

Never withdraw ISA money yourself to move it. If you pull £15,000 out of a Cash ISA and pay it into a Stocks and Shares ISA manually, it loses its historic tax-free status and the deposit eats £15,000 of your current year's allowance.

Instead, use the official ISA transfer process:

1. Open a Stocks and Shares ISA with your chosen provider (free on every app we rate — see our best investing apps UK guide).
2. In that new account, start an ISA transfer and tell it about your existing Cash ISA.
3. The providers move the money between themselves. Previous years' savings transfer without touching your current allowance, and since April 2024 you can even part-transfer money paid in this tax year.
4. Once it lands, the cash sits in your S&S ISA until you choose investments — it doesn't have to be invested on day one.

Where to open the Stocks and Shares ISA

Any of our top-rated apps work; two fit this situation especially well:

Comparing platforms first? Our Freetrade vs Trading 212 head-to-head covers the fee differences in detail.

FAQ

When does the Cash ISA allowance change? From 6 April 2027. The full £20,000 cash limit still applies for the 2026/27 tax year.

Does the cut affect money already in my Cash ISA? No — only new contributions from April 2027. Existing balances keep their tax-free status. Over-65s keep the £20,000 cash limit entirely.

Is the overall ISA allowance being cut? No. It stays at £20,000; at most £12,000 of it can be new cash contributions (under-65s).

How do I move cash into a Stocks and Shares ISA safely? Always via the official transfer process, started from the receiving provider — never a manual withdrawal.

Should I move my emergency fund into investments? No. Short-term money belongs in cash regardless of allowance rules.

This is general information, not financial advice. Allowance rules are as announced in the November 2025 Budget and could change before April 2027 — check GOV.UK for the latest. Investing puts your capital at risk; you may get back less than you put in. Do your own research and consider speaking to a qualified adviser about your situation.

Last updated: 11 June 2026.