This guide explains how Cash ISAs work today, how the ISA allowance operates and the confirmed changes due from April 2027.
What is a Cash ISA?
A Cash ISA (Individual Savings Account) is a tax-free savings account available to eligible UK residents aged 18 or over. Interest earned within a Cash ISA is not subject to income tax under current HMRC rules.
Like a standard savings account, you can save money and earn interest, but the key benefit is that the interest is protected from tax within the ISA wrapper.
How Cash ISAs fit within the ISA system
Cash ISAs are one of several ISA types, alongside Stocks & Shares ISAs, Innovative Finance ISAs, Lifetime ISAs and Junior ISAs. Although some ISA types have a lower funding limit, all ISA types share one combined annual allowance.
You can choose how to split contributions across different ISA types. Since April 2024, savers may also open and pay into more than one ISA of the same type within a tax year (excluding Lifetime and Junior ISAs), as long as they stay within the overall limit.
The ISA allowance in 2025/2026 and 2026/2027
The Government has confirmed that the overall ISA subscription limit will remain £20,000 per tax year for both 2025/26 and 2026/27. This full allowance can be placed entirely into a Cash ISA if you choose.
Key points:
- The ISA allowance refreshes annually on 6 April
- Unused allowance cannot be carried forward
- Since April 2024, savers may hold and pay into more than one Cash ISA in the same tax year (within the overall £20,000 limit)
- Contributions made between 6 April and 5 April count towards that tax year's allowance.
Confirmed changes to limits from April 2027
What’s staying the same
- The overall ISA limit will remain £20,000
- There are no changes for the 2025/26 or 2026/27 tax years.
What’s changing from April 2027
- If you are under 65, the Cash ISA limit will reduce to £12,000
- If you are 65 or over, the Cash ISA limit will remain £20,000.
These limits apply only to new contributions made from 6 April 2027 onwards. Existing Cash ISA balances built up before that date are not affected.
Staying informed
ISA rules are set by the UK Government and HMRC. For the most up to date information, you can visit GOV.UK- Individual Savings Accounts (ISAs).
This article is intended to provide general information only and does not constitute financial advice.
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