UK Caps Cash ISA Allowance at £12,000 for Under-65s

Chancellor Rachel Reeves announced reforms to individual savings accounts in the Autumn Budget, capping the annual cash ISA allowance at £12,000 for savers under 65 from April 2027, while maintaining the overall £20,000 ISA limit. The changes, detailed by HMRC, also prohibit transfers from stocks and shares ISAs to cash ISAs and impose charges on interest earned on cash holdings within stocks and shares ISAs, aiming to steer savers toward investments that support the UK economy.

The policy targets the shift from low-yield cash savings to higher-return options like stocks and shares. Under the new rules, individuals under 65 can allocate up to £12,000 to cash ISAs, with any excess up to the £20,000 total directed to stocks and shares or innovative finance ISAs. Those over 65 retain the full £20,000 cash allowance. Transfers between ISA types, permitted since 2008 to accommodate changing financial needs, will end for moves from investment-based ISAs to cash ones. Additionally, HMRC will apply taxes on interest from cash parked in stocks and shares ISAs, similar to non-ISA savings, to discourage prolonged holdings and promote reinvestment.

Reeves presented the reforms as a means to...