Overview
- From April 6, 2027, savers under 65 will be limited to £12,000 in cash ISAs, though the overall £20,000 ISA allowance remains, leaving up to £8,000 for investment ISAs; those aged 65 and over keep a £20,000 cash allowance.
- HMRC has confirmed plans to impose a charge on interest earned on uninvested cash held inside stocks and shares ISAs to stop circumvention, with a formal consultation to set the details well ahead of 2027.
- Tax on savings income will rise by two percentage points from April 6, 2027, lifting basic, higher and additional rates to 22%, 42% and 47%, with the Personal Savings Allowance still applying (£1,000 for basic-rate and £500 for higher-rate taxpayers).
- InvestEngine estimates around two million recent cash ISA contributors deposited more than £12,000 a year, and experts warn many risk‑averse savers are unlikely to switch into investments, increasing the chance of paying tax on interest outside ISAs.
- Consumer advocates say the changes could slow first‑home deposit saving, and the government will consult in early 2026 on replacing the Lifetime ISA with a simpler first‑time buyer product.