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Cash ISA 2027 Cap Impact Calculator
Estimate the effect of the enacted £12,000 annual Cash ISA cap from April 2027 for savers aged 64 or under at tax-year end, against a £20,000 cash-ISA counterfactual.
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SI 2026/1018 takes effect on 6 April 2027: if you are 64 or under at the end of a tax year, no more than £12,000 of that year's new subscriptions can go into cash ISAs. The overall ISA allowance stays £20,000, but using the remaining £8,000 in another ISA is optional. Enter your existing cash ISA balance, monthly saving and age at 5 April 2028. This model compares full £20,000 annual cash-ISA access with the enacted cap over 10, 20 and 30 years. It keeps every pound of entered savings in both paths: cash above each annual ISA cap stays in a taxable account, with the full Personal Savings Allowance assumed available before tax.
What the 2027 reform actually changes
The Individual Savings Account (Amendment) (No. 2) Regulations 2026, SI 2026/1018, were made on 10 September 2026 and come into force on 6 April 2027. Regulation 6 sets a £12,000 aggregate cash ISA subscription limit for a year in which the saver is 64 or under at year end. Someone 65 or over at that year end keeps the full £20,000 cash option. This is an annual limit, not a monthly one. In real life a lump sum can use it at once; this calculator models a fixed monthly saving stream and tracks when that stream exhausts the annual cap. Existing cash ISA balances stay sheltered. The unused part of the overall £20,000 allowance may go into a non-cash ISA, but no one is required to invest it.
Why £8,000 a year of taxable cash adds up
The model sends cash above each annual cash ISA cap to an ordinary taxable account. If you save more than £20,000 a year, the excess is taxable in both comparison paths; it does not disappear from the projected balances. Each path uses its own taxable-account interest and the full Personal Savings Allowance before applying the selected 2027-28 savings rate: 22%, 42% or 47% under Finance Act 2026 section 5. This is a scenario, not a tax bill for everyone: if you choose a non-cash ISA, save less than the cap, or use your PSA on other interest, your result differs. Low-income savers may also qualify for the separate 0% starting rate on savings; the model has no income input and does not apply it, so it can overstate their tax. SI 2026/1018 regulation 15 separately charges interest on cash held inside non-cash ISAs at the savings basic rate, 22% for 2027-28, paid by the account manager.
What the numbers actually mean for you
Who actually pays tax on savings interest
The Personal Savings Allowance quietly decides this. A basic-rate taxpayer gets £1,000 of interest tax-free per year, a higher-rate taxpayer £500, an additional-rate taxpayer nothing. At 5% rates, a higher-rate saver crosses their PSA with just £10,000 in the bank. The thresholds are not indexed either, so every rate rise and every pay rise quietly pulls more savers over the line without a single rule changing.
That is the pain point this calculator measures: rates high enough to finally pay something turned millions of ordinary savers into interest taxpayers, many discovering it only when HMRC adjusted their tax code.
What actually changes in April 2027
SI 2026/1018 regulation 6 sets the cash ISA limit at £12,000 a year from 6 April 2027 if you are 64 or under at the tax-year end. The overall annual £20,000 allowance remains. A saver who is 65 or over at that year end can still subscribe the full £20,000 to cash ISAs. The remainder for younger savers can be used in a non-cash ISA, left unused or saved outside the ISA system; nobody has to invest it.
Existing cash ISA balances remain tax-free. Formal cash-to-cash transfers continue, but SI 2026/1018 regulation 13 restricts transfers from stocks and shares or innovative finance ISAs into cash ISAs for anyone 64 or under at tax-year end. The new cap and transfer restriction are separate rules, both effective 6 April 2027.
The move that costs nothing before the cap lands
If both partners will be 64 or under at the end of 2027-28, the two cash ISA limits total £24,000 that year rather than £40,000 in 2026-27. A partner who reaches 65 by the relevant tax-year end retains a personal £20,000 cash limit. Those are subscription ceilings, not a recommendation to move money that you need elsewhere.
Use a formal provider-to-provider transfer to preserve an existing ISA wrapper. A withdrawal to your bank and later re-deposit is generally a new subscription unless a flexible ISA rule applies. From April 2027 a formal transfer from a non-cash ISA to a cash ISA is itself restricted for a saver who is 64 or under at year end, even if the balance came from an earlier year. A cash-to-cash transfer remains possible.
What to do with the squeezed £8,000
From 2027-28, a saver aged 64 or under at year end who wants to use the full £20,000 ISA allowance can subscribe up to £12,000 to cash ISAs and put any remaining allowance into a stocks and shares or innovative finance ISA. That latter step is optional. SI 2026/1018 also prevents a stocks and shares ISA from holding only money-market funds and charges interest on cash deposits held in non-cash ISAs at the savings basic rate, 22% in 2027-28. Neither workaround recreates an unrestricted cash ISA.
If you prefer cash outside an ISA, the model shows one possible cost after your Personal Savings Allowance. For £8,000 at 5%, first-year interest is £400; if a higher-rate saver has already used the £500 PSA on other interest, that £400 faces the enacted 42% savings rate in 2027-28, a £168 tax bill. If the full PSA is still available, the same £400 interest is untaxed that year. Your own other savings decide which case resembles you.
Flexible ISAs matter more once allowance is scarce
A flexible cash ISA may allow a withdrawal and replacement within the same tax year without treating the replacement like an ordinary new subscription. A non-flexible ISA treats money paid back in as new. SI 2026/1018 regulation 8 makes the £12,000 cash subscription limit relevant to flexible ISA replacement rules too, so do not assume a flexible label gives unlimited cash headroom.
Suppose you withdraw £5,000 in June for a roof repair and plan to replace it in February, within the same tax year. Ask the provider how its flexibility and the applicable annual cash limit treat that replacement before you pay it back. If it counts as a fresh subscription and you have only £12,000 of cash headroom, £5,000 uses more than two-fifths of the year's space. The calendar matters: a payment back in the next tax year is a different subscription decision.
Does an ISA still beat the Personal Savings Allowance?
For a basic-rate taxpayer with modest savings, sometimes not: the £1,000 PSA already shelters the interest on roughly £20,000 at 5%, so an ISA adds little until your balance or rate climbs past that. This is why the reform targets larger cash holdings, not ordinary savers.
The calculation changes for higher and additional-rate taxpayers. A higher-rate saver's PSA is £500 and an additional-rate saver's is zero, so each pound of ordinary-account interest above those thresholds is taxed at the enacted 2027-28 savings rates of 42% or 47%. For them the cash ISA wrapper can protect more interest. This model assumes the PSA has not already been used by other taxable savings and holds the selected future rate constant after 2027-28; check your actual income and interest before treating a 30-year line as a tax forecast.
Tax on displaced cash interest after your savings allowance
Outside an ISA, savings interest above the Personal Savings Allowance is taxed at the applicable savings-income rate. Inside a cash ISA, interest remains tax-free. The model gives the displaced ordinary-account interest its full unused PSA before applying the selected rate; if other savings have already used your PSA, your actual tax can be higher.
SI 2026/1018 regulation 6 limits annual cash ISA subscriptions to £12,000 from 6 April 2027 if the saver is 64 or under at tax-year end. The overall £20,000 ISA allowance remains. The cap lifts to £20,000 in the first projected tax year ending when the saver is 65 or older.
Calculation Steps:
- Enter the balance already sheltered in cash ISAs, your fixed monthly cash saving and the savings rate used for the projection.
- Give your age at 5 April 2028, the end of the first projected tax year. The model advances that age at each later tax-year end.
- For each tax year, count new subscriptions until the annual cash ISA limit is reached: £12,000 while you are 64 or under at year end, £20,000 from the first year you are 65 or older.
- For this cash-only comparison, put new savings above the cash ISA cap in an ordinary taxable account. If you save more than £20,000 a year, the excess is taxable in both paths; investing in another ISA is a separate, optional choice.
- Work out taxable-account interest and apply the available Personal Savings Allowance for that year: £1,000 basic, £500 higher or £0 additional.
- Apply the selected 2027-28 savings rate (22%, 42% or 47%) only to interest above that allowance, assuming the selected rate and PSA stay constant in later projection years.
Worked example
Priya, a higher-rate taxpayer, holds £30,000 in a 5% easy-access account outside any ISA at the start of the 2027-28 tax year.
If the balance stays £30,000, interest is £1,500 for one year. Her unused PSA covers £500, leaving £1,000 taxed at the enacted 42% savings higher rate: £420. This is an annual snapshot, not a five-year flat-tax forecast, because interest and balances change as savings compound.
The same £30,000, if already held inside cash ISAs, earns £1,500 in this single-year illustration with no UK tax on that cash ISA interest. Existing sheltered balances are untouched by the new subscription cap.
If Priya is 64 or under on 5 April 2028, she can subscribe at most £12,000 of new cash in 2027-28. Any unused part of her overall £20,000 ISA allowance can be left unused or put into a non-cash ISA by choice. This model assumes she instead keeps displaced cash outside an ISA and gives that account its available PSA.
Input definitions
Review the glossary of terms used in the calculation model below. Click on highlighted links to read more in-depth definitions in our financial glossary:
| Parameter | Definition & Context |
|---|---|
| Fixed monthly cash saving | The same new cash amount each month in this illustration. ISA law limits the year's total subscriptions, not each month's deposit. The model keeps the full entered amount, with money above each path's annual cash ISA cap placed in a taxable account. |
| Savings Rate | The annual rate on the account. Top cash ISA rates track Bank Rate and typically sit close to the best taxable easy-access rates. |
| Age on 5 April 2028 | Your age at the end of the first modelled tax year. Under SI 2026/1018 regulation 6 the £12,000 annual cash cap applies in a tax year ending while you are 64 or under; later years use your age at their own year ends. |
| Savings-income tax rate | The selected 2027-28 statutory savings rate: 22% basic, 42% higher or 47% additional under Finance Act 2026 section 5. The model assumes it remains unchanged later and does not apply the separate 0% starting rate available to some low-income savers. |
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