After months of speculation, we finally have clarity as Rachel Reeves announces the budget plans for 2026 and beyond. There has been a lot of information to unpack, but for now this is what it means for you and your ISA allowance.
Is the ISA allowance changing?
The overall ISA allowance will remain at £20,000, but starting in the 2027–2028 tax year, the maximum amount that can be placed in a cash ISA will drop to £12,000 for those under 65. If you are aged 65 and over you will not be affected.
What does this mean for under 65s?
The decision to cap cash ISA contributions at £12,000 reflects the government’s plan to encourage savers to put more funds into investment-based products, to boost investment in UK businesses.
Under 65s will be able to deposit up to £8,000 into Stocks & Shares ISAs on top of your £12,000 cash ISA allowance. Meaning, your overall ISA allowance remains at £20,000 for the tax year.
How will the new ISA allowance work?
Here’s what the new allowances will look like, when they come into effect on 6 April 2027:
| Aged 65 and over | Aged 64 and under |
| Cash ISA allowance: £20,000 | Cash ISA allowance: £12,000 |
| Overall ISA allowance: £20,000 | Overall ISA allowance: £20,000 |
What is a Stocks & Shares ISA, how is it different to a cash ISA?
A Stocks & Shares ISA is an account that allows you to invest your money in things like shares, bonds, or funds, and any return you make is tax-free.
A Cash ISA, on the other hand, is a savings account where your money earns interest, also tax-free, but without investing in the stock market.
