Chancellor Rachel Reeves has spelled out new rules around cash ISA bank accounts, with changes set to take effect in 2027. The annual tax-free limit will be reduced from £20,000 to £12,000, but only for individuals under the age of 65. Pensioners are protected and will continue to enjoy the higher allowance.
Key Changes to Cash ISAs
The government aims to encourage more households to invest in stocks and shares to boost the economy. However, the decision to spare pensioners has drawn criticism for being unfair to younger savers.
What This Means for Savers
Non-pensioner households are advised to maximize their ISA contributions this year before the rate is slashed in April 2027. Money Saving Expert explains: "The Chancellor has confirmed the cash ISA limit will be reduced to £12,000 a year from April 2027. The government hopes the change – the first cut to the cash ISA allowance since 2017 – will encourage more people to invest in stocks and shares instead."
For those aged 65 or older, the £20,000 cash ISA contribution limit will continue to apply. For those aged 64 or under, the cash ISA limit will fall to £12,000. This only applies to new contributions made from April 2027 and does not affect savings already contributed to a cash ISA.
These changes represent a significant shift in savings policy, impacting millions of households across the UK.
