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ISA changes: confirmed policy, a government proposal and speculation. Know the difference.
Confirmed: From 6 April 2027, under-65s will be able to contribute up to £12,000 a year to Cash ISAs, within the unchanged £20,000 overall annual ISA allowance. A typical split could be £12,000 in cash and £8,000 in stocks and shares.
People aged 65 and over will retain the full £20,000 Cash ISA allowance from the start of the tax year in which they turn 65.
From the same date, interest on cash held in a Stocks and Shares ISA will face a 22% charge. Under-65s will also be unable to transfer funds from Stocks and Shares ISAs to Cash ISAs.
The remaining £8,000 does not have to be invested immediately, but holding it as cash may carry a tax cost.
Government proposal: The government has consulted on a First Time Buyer ISA to replace the Lifetime ISA. Its final rules and launch date have not been confirmed.
Speculation: Commentators have discussed a possible cap on the total value of ISA holdings. No such cap has been announced.
Already have £500,000 in ISAs?
The confirmed £12,000 and £20,000 limits are annual contribution limits, not limits on the total amount you can hold in ISAs.
So, if you already hold £500,000 across your ISAs, the Cash ISA reduction does not require you to withdraw money, sell investments or reduce your existing balance.
Your holdings can remain within the ISA tax shelter, although the new rules on cash interest and transfers may affect how you manage them.
A cap on total ISA holdings would be a separate policy and could affect people with substantial existing balances, depending on its design and whether existing holdings were protected.
No such cap has been announced.
The 2026/27 annual ISA allowance remains £20,000.
In short: an annual contribution limit is not a limit on the amount you can already hold.
General information only, not personal tax or financial advice.
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