Money Simplified ISA reforms · April 2027
 

Most people have never thought about which type of ISA they hold. It's just "the ISA". From April 2027, that starts to matter.

Yearly cash ISA limit, under 65s

£20,000 → £12,000

The change

If you're under 65, the most you can put into a cash ISA each year is set to drop from £20,000 to £12,000. The overall ISA limit stays at £20,000. So the other £8,000 is still tax-free, but only if it goes into a stocks and shares ISA.

The loophole, and why it's already shut

The obvious move is to open a stocks and shares ISA and leave the money sitting in cash. Same tax-free status, no market risk.

That's been anticipated. A new 22% tax on interest earned on cash held inside a stocks and shares ISA is being discussed alongside the allowance cut. Cash in the wrong wrapper would be taxed roughly as if it were sitting in a normal savings account.

Why it's happening

Follow the chain. Less room for cash in an ISA. No parking cash in the investing wrapper either. So the only way to keep the full £20,000 tax-free is to invest at least £8,000 of it. More people end up invested, whether they planned to or not. That's the point.

What it means for you

Saving under £12,000 a year in cash

Nothing changes. This is most people.

Saving more than £12,000 a year in cash

Use the full £20,000 before April 2027. After that, the extra gets invested inside an ISA or taxed outside one.

Over 65

The full £20,000 cash allowance stays.

The honest caveat

None of this is law yet. Proposals like this get softened, delayed or dropped more often than they land intact. But the direction of travel is clear, and it's easier to plan for it in 2026 than to react to it in 2027.

One question for you

Would you invest the extra £8,000, or keep it in a normal savings account and pay the tax on the interest? Hit reply and tell me. I read every one.
 
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