Chancellor Rachel Reeves has announced significant changes to cash ISA regulations that will affect millions of savers across the UK. From April 2027, the maximum amount individuals can deposit into cash ISAs each year will be reduced from £20,000 to £12,000.
This reduction represents a considerable setback for savers, as it limits the amount of tax-free interest they can earn on their savings. However, there remains a window of opportunity, with the current rules in place until the changes take effect in just over a year.
The government’s intention behind this adjustment is to incentivize more people to diversify their finances by investing in stocks and shares, rather than accumulating large balances in cash savings alone.
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Importantly, pensioners aged 65 and over will be exempt from this reduction; their ISA allowance will remain at £20,000, preserving their ability to save tax-free at the current higher limit.
Money Saving Expert confirms the changes, noting: “The Chancellor has confirmed that the cash ISA limit will be cut to £12,000 per year starting April 2027. This is the first reduction since 2017 and aims to encourage greater investment in stocks and shares.”
For savers under 65, the new £12,000 limit will apply only to contributions made from April 2027 onwards, with existing savings unaffected.