£12,000. That is your new Cash ISA ceiling from April 2027 if you are under 65. The remaining £8,000 of your £20,000 ISA allowance must go into Stocks & Shares or Innovative Finance ISAs to stay tax-free.
The Autumn Budget 2025 announced this change to push UK savers from cash hoarding into productive investment. The Government's argument: £270 billion sitting in Cash ISAs earning 4% when UK equities need retail investment capital.
What this means for your savings strategy
If you currently max out a Cash ISA at £20,000/year:
- Before April 2027: all £20,000 can sit in cash, tax-free
- After April 2027: £12,000 cash + £8,000 must go into S&S ISA or remain in taxable accounts
If you put the £8,000 excess into a taxable savings account instead of a S&S ISA:
- Higher-rate taxpayer (40%): loses ~£144/year in tax on £8,000 at 4.5% interest
- Over 10 years: £1,440 in lost tax-free interest
- Over 30 years with compounding: £8,400+ in wealth erosion
The over-65 exemption
Savers aged 66+ on April 6 of the tax year are EXEMPT. They keep the full £20,000 Cash ISA limit. This recognizes that retirees relying on cash savings for income should not be forced into market risk.
The 22% cash-in-S&S-ISA tax
A new 22% flat-rate tax applies to interest earned on cash held INSIDE Stocks & Shares ISAs from April 2027. This closes the loophole where people parked cash in S&S ISA wrappers to avoid the Cash ISA cap. You must actually invest, not just hold cash in an investment wrapper.
