Key Takeaways:
- As of April 2027, the amount you can put into your Cash ISAs in each tax year is dropping from £20,000 to £12,000
- These changes will only affect those under 65
- Cash ISA changes aim to get people investing instead
After much consideration, the Chancellor has announced plans to reduce the annual Cash ISA allowance from £20,000 to £12,000 per tax year, starting in April 2027 — affecting people under 65 only.
This has been a topic on the agenda for quite some time, with a pause on changes back on 15th July 2025.
But the budget announcement (26th November 2025) contained details of the change to the cash ISA allowance.
Jump to:
- Cash ISA allowance changes
- What are your financial goals?
- Saving for your child in your Cash ISA
- Getting started with investing
Cash ISA allowance changes
As of April 2027, every tax resident of the UK can add up to £20,000 (in each tax year) across all adult ISAs they hold under the following conditions:
Cash ISAs:
If you’re under 65, you’ll be able to deposit up to £12,000 per tax year, with the remaining £8,000 of your allowance spread to other ISA types (Lifetime ISA restrictions apply). If you’re 65 or older, you’ll be able to deposit up to £20,000.
Stocks and Shares ISAs:
You can continue to deposit up to £20,000 per tax year, minus any deposits you make into any other ISA type.
Innovative Finance ISAs:
You can continue to deposit up to £20,000 per tax year, minus any deposits you make into any other ISA type.
Lifetime ISAs:
You’ll be able to deposit up to the £4,000 per tax year cap, with the remaining £16,000 spread to other ISA types (new Cash ISA restrictions apply).
These changes don’t mean you have to restrict yourself to just adding money to one type of ISA, though.
Since April 2024, the ISA rules changed, meaning you can now open multiple ISA types in a tax year with different providers (aside from the Lifetime ISA, as those are restricted to one per person).
A key point of these changes is that you need to keep on top of how much of your £20,000 ISA allowance you’ve used and not exceed this (being mindful of the caps for the Cash ISA and Lifetime ISA in mind, too).
Cash ISA changes: What are your financial goals?
Cash ISAs may be good for short-term savings goals (things you’re hoping to achieve in the next five years, including emergency funds). But, for longer-term goals that you need to build a significant amount of money for, investing is generally considered the better method.
Not only because investments have time to grow (and ride out any potential highs and lows of the stock markets), but also as a strategy to try and beat inflation. Noting, it’s normal to expect to see your investments go down as well as up in the short term, with the hope it gradually trends upwards.
At the time of writing, the Bank of England’s inflation rate is 3.6%. But with its target at 2%, the UK has already been facing higher inflation and costs of living in recent years. The interest rates offered by Cash ISAs may not be able to keep up with the cost of rising inflation in the future.
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
Are you saving for your child in your Cash ISA?
An option for those saving for their children with their own Cash ISA account, could be a Junior ISA instead.
Children are entitled to their own annual £9,000 Junior ISA allowance, so you could save or invest for them in an account like this — and free up more of your own Cash ISA allowance by doing so.
However, money in a Junior ISA belongs to the child and can’t be accessed before they turn 18. Depending on your family’s needs, this could be a great 18th birthday present for them on their big day.
Some providers (like Wealthify) let you invite family and friends to contribute to the account, too.
Getting started with investing
Of course, stock markets can go down as well as up, meaning there is risk involved with investing. However, you could take this as an opportunity to potentially grow your wealth, rather than feel restricted by a savings cap.
When it comes to investing, diversification is key.
Spreading your investments into smaller purchases across different companies has been a long-standing option for those looking to increase their returns.
You don’t need to be an investing expert to start
The good news is that Wealthify has a team of experts that can manage all your investments for you.
If you’re interested in spreading some of your ISA allowance into a Stocks and Shares ISA instead, our beginner-friendly, hands-off approach could be your first step into the world of investing.
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
With investing, your capital is at risk, so the value of your investments can go down as well as up, which means you could get back less than you initially invested.
Wealthify does not provide advice. If you’re not sure whether investing is right for you, please speak to a financial adviser.
References:
[1]: Commentary for Annual savings statistics: September 2025 - GOV.UK
[2]: S&P 500 Historical Annual Returns (1927-2025)
