Your 2026/27 ISA Allowance — Why This Is the Last Year It Works Like This

2026/27 ISAs 8 min read

Your 2026/27 ISA Allowance — Why This Is the Last Year It Works Like This

If you're under 65, this is the final tax year you can put the full £20,000 into a Cash ISA if you want to. From April 2027, only £12,000 of it can go into cash. Here's exactly what's changing, and what to actually do about it.

Not financial advice. This explains the rules and dates — it isn't a recommendation to hold cash over stocks and shares, or vice versa. Where you put your money depends on your own circumstances, time horizon and risk tolerance.

What's actually changing, and when

The tax year 2026/27 runs from 6 April 2026 to 5 April 2027. Right now, if you're under 65, you can put your entire £20,000 annual ISA allowance into a Cash ISA if that's what suits you — same as it's worked for years.

From 6 April 2027 — the very next tax year — that changes. Under-65s will only be able to put £12,000 of their overall £20,000 allowance into a Cash ISA. If you wanted to use the full £20,000 allowance, anything above that £12,000 would need to go into another eligible ISA type, such as a Stocks & Shares ISA or Innovative Finance ISA, or — subject to its own separate £4,000 limit and eligibility rules — a Lifetime ISA. Your total £20,000 allowance isn't being cut — it's the amount you can newly subscribe to Cash ISAs each tax year that's being capped.

2026/27 vs 2027/28, for under-65s

	2026/27 (now)	2027/28 (from 6 Apr 2027)
Total ISA allowance	£20,000	£20,000
Maximum Cash ISA subscription	£20,000	£12,000
Amount that must be non-cash to use full £20k	£0	£8,000*

*Subject to the eligibility, subscription and investment rules of the ISA type used. Source: HMRC technical consultation on the draft Individual Savings Account (Amendment) Regulations 2026, published 16 July 2026.

Already have more than £12,000 in Cash ISAs?

The new £12,000 limit is an annual subscription limit — how much you can newly pay in each year — not a cap on the total amount you're allowed to hold. Existing ISA money doesn't suddenly lose its tax-free status just because your balance is above £12,000.

Where things actually stand — this is announced policy, not a rumour

HMRC published a technical consultation on the draft regulations on 16 July 2026 — the government's language has moved from "proposed" to a specific, published legal text. The regulations are expected to be laid before Parliament in autumn 2026, in force from 6 April 2027. This isn't Budget speculation — it's already in motion.

Three more changes worth knowing about, all from April 2027

You won't be able to transfer back into cash. From 6 April 2027, under-65s won't be able to transfer funds from a Stocks & Shares ISA or Innovative Finance ISA into a Cash ISA. If you were already planning to move investments into cash within an ISA before the rules change, don't assume a transfer initiated at the last minute will complete before 6 April 2027 — current guidance says non-cash ISA transfers can take up to 30 calendar days, so check timings with your providers well in advance.

A new 22% charge applies to interest on cash inside non-cash ISAs. Interest or alternative finance returns paid on cash held within a Stocks & Shares or Innovative Finance ISA will face a flat 22% charge — this applies regardless of your age or personal income-tax band. The ISA manager pays the charge to HMRC directly; you won't need to declare that ISA interest yourself, and the Personal Savings Allowance doesn't apply to it.

You won't be able to use a non-cash ISA purely as a cash-like workaround. From April 2027, an account made up entirely of investments classed as "cash-like" won't qualify. Initially, the government's definition covers Money Market Funds specifically — other investments like individual shares, funds, ETFs and bonds (including UK gilts) are unaffected. Partial allocations remain permitted; the restriction is aimed squarely at stopping a Stocks & Shares ISA being used as a substitute Cash ISA simply to bypass the £12,000 limit.

If you're turning 65 around this time

The government has clarified this specifically: if you turn 65 during a tax year, you get the full £20,000 Cash ISA allowance (not the £12,000 cap) from the start of that tax year — not from your birthday. The transfer restriction is also disapplied from that same point. If you're close to 65 and this affects your planning, it's worth checking exactly which tax year you'll turn 65 in, since it determines which rules apply to you from day one of that year, not part-way through.

A reminder on the "one ISA per type" myth

You may still see this claim repeated: that you can only pay into one Cash ISA and one Stocks & Shares ISA per year. That hasn't been true since April 2024 — you can now pay into multiple Cash ISAs or multiple Stocks & Shares ISAs in the same tax year, as long as your combined subscriptions stay within the relevant limits. Lifetime ISAs are an exception: you can still only subscribe to one LISA in a tax year. If you're reading older ISA guidance online, this is one rule particularly worth checking for an April 2024-or-later update.

What to actually do this tax year

If holding a larger amount in cash already fits your goals, 2026/27 is the final tax year in which an under-65 can subscribe the full £20,000 ISA allowance to cash. That doesn't mean you should do so purely because the rule is changing.
The £20,000 total allowance itself isn't going anywhere — there's no reason to rush a Stocks & Shares decision purely because of this specific change.
ISA allowances don't carry over — unused allowance from 2026/27 is gone on 6 April 2027, regardless of what you put it toward.
Use our to compare current Cash ISA rates before this year's allowance resets.

Is the ISA allowance being cut to £12,000?

No — the overall £20,000 annual ISA allowance is staying the same. What's changing from 6 April 2027 is that under-65s can subscribe no more than £12,000 of it to Cash ISAs. To use the full £20,000 allowance, the remaining £8,000 would need to be subscribed to eligible non-cash ISA(s), subject to the rules and limits of the ISA type used.

Is this confirmed, or still just proposed?

HMRC published a technical consultation on the draft Individual Savings Account (Amendment) Regulations 2026 on 16 July 2026. The regulations are expected to be laid before Parliament in autumn 2026, taking effect 6 April 2027. This is well beyond early-stage proposal at this point, though final regulations haven't been laid yet.

Does the £12,000 cap apply to everyone?

No — it applies to under-65s. If you turn 65 during a tax year, you're entitled to the full £20,000 Cash ISA allowance from the start of that tax year, not just from your birthday, and the transfer restriction described above is also disapplied from that point.

Can I still open multiple Cash ISAs in the same year?

Yes. Since April 2024, you can pay into multiple Cash ISAs or multiple Stocks & Shares ISAs in the same tax year, as long as your combined contributions stay within your total £20,000 allowance. Lifetime ISAs are an exception — you can still only subscribe to one LISA per tax year.

What happens if I already have more than £12,000 in a Cash ISA when the rule changes?

Existing Cash ISA balances aren't affected by the new cap — it applies to what you can newly contribute in future years, not to money already held. Check official guidance nearer April 2027 for full transitional detail once the final regulations are laid.

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