Savings & ISAs15 May 2026

ISA Allowance 2026/27: What the Autumn Budget 2025 Means for Your Savings

The 2026/27 tax year is the last one before a significant change to how the UK Cash ISA works. The headline £20,000 ISA allowance is unchanged — but from 6 April 2027, the amount you can put into a Cash ISA is being cut for savers under 65. If you want to use the more generous regime, you have until 5 April 2027 to act.

This post explains exactly what changed, what didn't, and what to do about it during 2026/27.

Use the ISA Calculator to project your tax-free growth, or the Cash ISA vs Stocks & Shares ISA Calculator to compare the two side by side.

What stays the same in 2026/27

For the 2026/27 tax year (6 April 2026 – 5 April 2027) the ISA framework looks much as it did before:

  • Overall annual allowance: £20,000.
  • Junior ISA allowance: £9,000 per child.
  • Lifetime ISA cap: £4,000 inside the £20,000 overall allowance, with the 25% government bonus on contributions to age 50.
  • Innovative Finance, Stocks & Shares and Cash flavours: all still available, all still wrapped in the same overall £20,000.
  • You can pay into multiple ISAs of the same type in the same year (a rule change in force since 2024/25). This is unchanged.
  • Transfers remain unrestricted in count: you can move existing ISA balances between providers without it touching this year's £20,000.

So 2026/27 is, on the surface, a normal ISA year. The story changes the moment you look past 5 April 2027.

What changes in April 2027

In the Autumn Budget 2025, the Chancellor announced a structural change to the Cash ISA. From 6 April 2027:

  • Cash ISA limit: £12,000 per year for savers under 65 (down from £20,000).
  • Cash ISA limit for those 65+: unchanged at £20,000.
  • Overall ISA allowance: still £20,000.

The implication: under-65s can still use the full £20,000 ISA allowance from April 2027 — but at least £8,000 of it must go into something other than cash. That means Stocks & Shares, Innovative Finance, or Lifetime ISAs, in whatever proportions fit your plan.

Two further changes were announced alongside this for the same April 2027 start:

  • Savings interest tax rates on interest outside an ISA rise to 22% / 42% / 47% for basic, higher and additional-rate payers respectively.
  • Personal Savings Allowance of £1,000 / £500 / £0 is unchanged in cash terms.

Together, these make the "cash-outside-an-ISA" route materially more expensive for anyone earning meaningful interest. Cash inside an ISA still pays no tax — but the cap on putting cash inside one is being cut.

Why HM Treasury made this change

The official rationale is to nudge more household savings into productive investment. The Treasury's view is that a significant share of UK ISA money sits in cash, earning interest that — over 10+ year horizons — typically lags inflation. By capping cash ISA contributions at £12,000 for under-65s, the policy hopes to push the marginal saver towards Stocks & Shares ISAs.

You don't need to agree with the reasoning to plan around it. What matters in practical terms:

  • If you are over 65, the change does not affect you.
  • If you are under 65 and you typically max your £20,000 allowance in cash, you have one more year — 2026/27 — to do so before the cap drops.
  • If you only ever contribute a few thousand pounds a year, the change is largely cosmetic for you.

Should I front-load my Cash ISA in 2026/27?

The short answer: it depends on your time horizon and your appetite for volatility, not on the policy change alone.

Two cases:

Case 1 — money you'll need within 5 years. If you're saving for a deposit, a wedding, a new kitchen, or any goal where the time horizon is under five years, a Cash ISA continues to be a sensible place for it in 2026/27. The April 2027 change doesn't penalise you — you still have a Cash ISA option after April 2027, just capped at £12,000/year. If you have more than £12,000 you want held in cash, getting it into an ISA wrapper before 5 April 2027 makes sense because it stays inside the wrapper forever (transfers between providers won't reduce your balance).

Case 2 — money for 10+ years. Historically, UK and global equities have outperformed cash savings over rolling 10-year windows. If your horizon is genuinely long, a Stocks & Shares ISA is usually the better wrapper regardless of the rule change. The 2027 cap shift doesn't change that calculation — it just means more people will be nudged towards it by default.

If you're unsure which case you fall into, the Cash ISA vs Stocks & Shares ISA Calculator lets you model both side by side with your own contribution profile, return assumptions and fees, and compare nominal vs real-terms outcomes.

What about flexible ISAs?

If you hold a flexible Cash ISA, you can withdraw money from it and replace the same amount within the same tax year without it counting against your allowance. That feature is unchanged in 2026/27 and continues into 2027/28 — but the underlying £12,000 contribution cap means a flexible Cash ISA's headroom is smaller from April 2027 if you're under 65.

A practical pattern in 2026/27 if you want to keep cash flexibility while making the most of the wrapper:

  1. Open a Cash ISA early in the tax year (April 2026).
  2. Fund it heavily during 2026/27 — up to the full £20,000 if it suits you.
  3. From April 2027 onwards, withdrawals are still permitted; only new contributions are capped at £12,000.

The £20,000 balance you build during 2026/27 doesn't get clawed back by the rule change. It only restricts what you can add from 2027/28 onwards.

Lifetime ISAs after the change

Lifetime ISAs were not changed in the Autumn Budget 2025. The £4,000 annual cap and 25% government bonus continue as before. A Lifetime ISA still counts inside the overall £20,000 — it always has — and the bonus money the government pays in does not count against your allowance.

If you're under 40 and saving for a first home or for retirement at 60+, the LISA remains one of the most subsidised wrappers available. Run the numbers on the Lifetime ISA Calculator before opening one — particularly the 25% withdrawal penalty on non-qualifying withdrawals, which can leave you worse off than not using a LISA at all if you need the money for the wrong reason.

Junior ISAs unchanged

Junior ISAs are entirely outside the cap change. The £9,000 annual allowance per child applies regardless of the parents' or child's age. Cash or Stocks & Shares Junior ISAs continue exactly as before. See the Junior ISA Calculator for an age-18 pot projection.

A 2026/27 ISA action list

If you want a simple checklist for the current tax year, this is the order most savers will follow:

  1. Use your full £20,000 if you can comfortably afford it. If you can't, prioritise the cash you actually need (emergency fund) and put the rest into a Stocks & Shares ISA if your horizon is 10+ years.
  2. If you typically over-fund the Cash ISA, make 2026/27 the year you do so. From April 2027 the cap is £12,000 if you're under 65.
  3. Check your provider's terms. Some Cash ISA providers offer first-year bonus rates that drop sharply after 12 months. Plan a transfer to a better rate at the end of the bonus period — transfers don't use your allowance.
  4. If you have legacy non-ISA savings earning interest, work out how much fits into your £20,000 wrapper this year. From April 2027, interest tax outside the wrapper rises to 22% / 42% / 47%.
  5. Don't forget Lifetime ISAs and Junior ISAs in the household plan. Both sit inside their own caps, both attract free money from government (LISA bonus, plus tax-free growth on Junior ISAs).

The bottom line

For 2026/27, nothing about your ISA is worse than it was. The £20,000 allowance is intact, the Cash ISA is intact, and you can split it however you like. April 2027 is where the rules narrow — and only for under-65s on the cash side.

If you have meaningful cash savings and you're under 65, the practical action this tax year is to make sure as much of your tax-protected cash headroom is used as possible before the cap drops. If you have a long horizon, the change is a useful reminder to look hard at whether Stocks & Shares is actually a better wrapper for your money anyway.

To model the change against your own contribution pattern, try the Cash ISA vs Stocks & Shares ISA Calculator or the standard ISA Calculator.

This article is for general guidance only and is not personalised financial advice. ISA rules, allowances and tax rates may change. For advice tailored to your situation, speak to an FCA-authorised financial adviser.

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