The government has just published the details of a big shake-up to ISAs, and it's the kind of change that's easy to miss but could actually affect where you keep your savings.
The headline: from 6 April 2027, there's going to be a new, lower limit on how much you can put into a Cash ISA each year — but only if you're under 65. Alongside that, there's a set of rules with a slightly scary name: anti-circumvention rules. Don't worry, I'll translate all of it.
Here's what's changing, why it's happening, and what you might want to think about.
First, a quick reminder: what's an ISA again?
An ISA (Individual Savings Account) is just a savings or investment account where you don't pay tax on the interest, dividends, or growth. It's the government's way of saying "go on, save some money, we won't tax this bit."
You can put up to £20,000 a year across your ISAs. That total isn't changing. There are a few flavours:
- Cash ISA — like a normal savings account, but tax-free.
- Stocks & Shares ISA — for investing in the markets.
- Innovative Finance ISA — for peer-to-peer lending.
- Lifetime ISA (LISA) — for a first home or retirement.
Keep those in mind, because the new rules treat cash and non-cash ISAs differently.
The big one: a new £12,000 Cash ISA limit (if you're under 65)
This is the change most people will notice.
From April 2027, if you're under 65, the most you can put into a Cash ISA in a year drops to £12,000. The other £8,000 of your £20,000 allowance can still go into ISAs — it just has to go into something other than cash, like a Stocks & Shares ISA.
If you're 65 or over, nothing changes here — you keep the full £20,000 Cash ISA limit.
In plain English: The government wants people to invest a bit more of their savings rather than leaving everything in cash. The thinking is that money sitting in cash long-term tends to lose value to inflation, and they'd like more of it working in the economy. Whether you agree or not, that's the nudge they're making.
Your overall £20,000 ISA allowance is untouched. It's only the cash slice of it that's being capped for younger savers.
Now the "anti-circumvention" bit — explained like a human
Whenever the government sets a new limit, some people (and some banks) will try to find clever ways around it. "Anti-circumvention rules" is just the official term for "we've thought of your loophole, and we've closed it."
Here are the three loopholes they're shutting down — all from April 2027.
1. You can't just hold cash in a non-cash ISA to dodge the limit
The obvious workaround would be: open a Stocks & Shares ISA, then just leave £20,000 sitting in there as cash instead of investing it. Same money, same safety, but it sidesteps the new £12,000 cash cap.
So the rule is: if you hold cash in a non-Cash ISA and earn interest on it, that interest gets hit with a flat 22% charge. This applies to everyone, whatever your age.
And here's the catch that's easy to forget: this charge doesn't only hit cash you deliberately parked. It also applies to any cash that's just sitting there for other reasons — like the money left over after you sell some shares and haven't reinvested it yet, or a chunk you meant to move out and forgot about. If it's earning interest as cash inside a non-Cash ISA, it can get caught by the 22% charge.
Translation: Parking cash in a Stocks & Shares ISA to avoid the limit won't be worth it — the tax charge eats the benefit. And don't leave sale proceeds or stray cash lounging in there either: keep it invested or move it out, because idle cash can be charged just the same. These accounts are meant for investing, not for hiding cash.
2. You can't fill a non-cash ISA entirely with "cash-like" investments
There's a sneakier version of the same trick: instead of holding actual cash, you load your investment ISA with something called a Money Market Fund, which behaves a lot like cash — low risk, steady, very cash-ish.
From April 2027, you won't be allowed to hold 100% of your non-Cash ISA in Money Market Funds. You can still hold some — partial amounts are fine — you just can't make your whole "investment" ISA secretly a cash account.
Translation: A little is okay. An entire portfolio dressed up as cash is not.
3. You can't shuffle money from investment ISAs back into Cash ISAs
The last move would be: build up money in a non-Cash ISA, then transfer it all across into a Cash ISA later, getting around the £12,000 cap by the back door.
So from April 2027:
- Transferring from a Cash ISA to an investment ISA — still allowed. ✅
- Transferring from an investment ISA back to a Cash ISA — not allowed. ❌
There's one exception: if you're 65 or over, this restriction doesn't apply to you. You can still move money whichever way you like.
Who actually needs to care about this?
Let's keep it simple.
If you're under 65 and you save more than £12,000 a year into a Cash ISA: This affects you directly from April 2027. Anything above £12,000 will need to go into a different type of ISA (or a regular taxable account).
If you're under 65 and you save less than £12,000 in cash: Honestly? You probably won't feel a thing. Most people don't max out their Cash ISA, so the new limit won't bite.
If you're 65 or over: You keep the full £20,000 Cash ISA limit, and the transfer restriction doesn't apply to you. The only rules that still touch you are the 22% charge on cash interest in investment ISAs and the Money Market Fund cap — but those only matter if you were trying to use an investment ISA as a cash account anyway.
So what should you do about it?
Nothing urgent — these rules don't start until 6 April 2027, so you've got time. But a few sensible things to keep in mind:
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There's no rush to panic-move money. Your existing ISAs are fine. This is about future contributions, not your past savings.
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If you're a heavy cash saver under 65, it's worth getting comfortable with the idea of a Stocks & Shares ISA for the portion above £12,000. You don't have to take big risks — but the tax-free allowance is most valuable when you actually use it.
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Think about whether cash is right for that money anyway. Money you won't touch for 5+ years often does better invested than sitting in cash. That's partly what this whole reform is nudging at.
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If you're nearing 65, remember the rules are gentler on you. There's no need to rearrange everything early.
This isn't financial advice — everyone's situation is different, and if you've got a large amount at stake it's worth speaking to a regulated adviser. But the basic message is calm: a limit is moving, a few loopholes are closing, and you've got until 2027 to plan around it.
Key dates and numbers at a glance
- 6 April 2027 — all the new rules start.
- £20,000 — total ISA allowance (unchanged).
- £12,000 — new yearly Cash ISA limit for under-65s.
- £20,000 — Cash ISA limit for those 65 and over (unchanged).
- 22% — flat charge on interest from cash held in a non-Cash ISA.
- Money Market Funds can't make up 100% of a non-Cash ISA.
- No transfers from investment ISAs back into Cash ISAs (unless you're 65+).
Source: ISA reform 2027: anti-circumvention rules factsheet — GOV.UK, published 23 June 2026. Figures reflect the published factsheet as of June 2026 and may change before the rules take effect. This article is for general information, not financial advice.