Cash Individual Savings Account (ISA) limit reduction
Published 17 September 2026
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This publication is available at https://www.gov.uk/government/publications/reduction-in-the-cash-individual-savings-account-isa-limit/cash-individual-savings-account-isa-limit-reduction
Who is likely to be affected
Savers with Individual Savings Accounts (ISAs).
Financial institutions who provide or manage these accounts or investments.
General description of the measure
This measure amends the Individual Savings Account Regulations 1998 to reduce the annual cash ISA subscription limit to £12,000 for individuals aged under 65 from 6 April 2027. For investors aged 65 or over the annual cash ISA limit will remain at £20,000.
The measure also introduces consequential changes and anti-circumvention rules to ensure the reduced cash ISA limit operates as intended.
These include restrictions on transfers from stocks and shares ISAs and Innovative Finance ISAs (non-cash ISAs) into cash ISAs, a flat rate charge of 22% on any interest paid on cash held in non-cash ISAs, rules relating to Money Market Funds, and additional reporting requirements for ISA managers.
Policy objective
The measure supports the government’s objective of encouraging greater retail investment and improving long-term returns for savers.
The reduction in the cash ISA subscription limit is intended to encourage retail investment which, historical trends suggest, provides better returns for savers.
The anti-circumvention rules are intended to ensure the reduced cash ISA limit operates as intended and cannot be circumvented, for example, by holding large cash balances or cash-like products within non-cash ISAs, or by routing subscriptions through non-cash ISAs before transferring them into cash ISAs.
Background to the measure
At Budget 2025, the government announced that, from 6 April 2027, the annual cash ISA subscription limit for individuals aged under 65 would be reduced to £12,000 within the overall ISA subscription limit of £20,000.
The government also announced that individuals aged 65 and over would continue to be able to save up to £20,000 annually in a cash ISA.
On 23 June 2026, the government announced the accompanying anti-circumvention rules required to support the policy.
Detailed proposal
Operative date
The measure will have effect from 6 April 2027.
Current law
The ISA rules are contained in the Individual Savings Account Regulations 1998 (SI 1998/1870) (‘the ISA Regulations’) which are made under powers in Chapter 3 of Part 6 of the Income Tax (Trading and Other Income) Act 2005 and section 151 of the Taxation of Chargeable Gains Act 1992.
The ISA Regulations currently provide a single overall annual ISA subscription limit of £20,000. They do not provide for separate cash ISA subscription limits based on age. They also specify the types of investments eligible to be held in an ISA. Money Market Funds are not currently defined separately from other qualifying securities for stocks and shares ISAs.
The ISA Regulations currently permit transfers between cash ISAs, stocks and shares ISAs and Innovative Finance ISAs subject to the existing transfer rules. They do not impose restrictions on the proportion of Money Market Fund investments held within stocks and shares ISAs and do not impose a charge on interest paid on cash held within stocks and shares ISAs or Innovative Finance ISAs.
Proposed revisions
The ISA Regulations will be amended to:
- reduce the cash ISA subscription limit to £12,000 for individuals aged under 65, while retaining the overall ISA subscription limit of £20,000 and a £20,000 cash ISA subscription limit for those aged 65 and over
- introduce anti-circumvention measures, including restrictions on certain ISA transfers and a charge on interest and alternative finance returns arising from cash held within non-cash ISAs, rules relating to Money Market Funds and additional reporting requirements for ISA managers
- make consequential amendments required for the operation of the new cash ISA subscription limit
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| Empty | Empty | Empty | Empty | Empty | Empty |
The final costing will be subject to scrutiny by the Office for Budget Responsibility.
Macroeconomic impact
This measure is expected to encourage individuals affected by the reduced cash ISA subscription limit to allocate a greater proportion of their ISA savings to stocks and shares ISAs or to other qualifying investments.
The scale of this reallocation is not expected to have a significant macroeconomic impact.
Impact on individuals, households and families
Individuals will need to comply with new cash ISA limits relevant to their age.
The measure is expected to affect individuals aged 64 or under who currently subscribe more than £12,000 annually to a cash ISA and individuals who hold cash or Money Market Funds within stocks and shares ISAs or Innovative Finance ISAs (non-cash ISAs).
In 2022 to 2023, 78% of cash ISA subscribers aged under 65 subscribed less than £12,000 to a cash ISA and 22% subscribed over £12,000.
Following the introduction of the revised limits, those individuals who are affected may need to adjust how they allocate funds between cash ISAs and non-cash ISAs and the type of investments they hold in a stocks and shares ISA.
The measure is not expected to impact on family formation, stability or breakdown.
This measure is not expected to affect individuals’ experience of dealing with HMRC as this does not change any processes or tax administration obligations.
Equalities impacts
This measure is expected to impact customers who subscribe to a cash ISA. However, impacts will differ by age as different cash ISA subscription limits apply to individuals aged under and over 65. This reflects that older savers may wish to restructure and derisk their investments as they approach retirement age.
This measure may apply to individuals regardless of their protected characteristics. If a protected group is estimated to be overrepresented in this population, it is considered to be disproportionately impacted.
Individuals who are aged between 55 and 64 and those aged 65 years or older are estimated to be overrepresented in the population subscribing to a cash ISA (18% and 34% respectively), compared to their prevalence in the UK adult population (17% and 24%, respectively).
Females are estimated to be slightly overrepresented in the population subscribing to a cash ISA (53%) compared to their prevalence in the UK adult population (50%).
Individuals from a White English, Welsh, Scottish, Northern Irish or British ethnic background are also estimated to be overrepresented in the population subscribing to a cash ISA (90%), compared to their prevalence in the UK adult population (82%).
Individuals with a disability are estimated to be overrepresented among cash ISA subscribers aged 65 and over (37%) compared to their prevalence in the UK adult population (26%).
Finally, individuals who belong to the Christian faith are also estimated to be overrepresented in this population (74%) compared to their prevalence in the UK adult population (52%).
Where data is available, no other protected groups were overrepresented.
Administrative impact on business including civil society organisations
This measure will have a significant impact on ISA managers who will incur one-off costs associated with updating systems, processes, reporting arrangements, customer communications and compliance procedures.
Estimated one-off impact on transitional business costs (£ million)
| One-off impact | (£ million) |
|---|---|
| Costs | 6.0 |
| Savings | — |
Ongoing costs arising from administering the revised subscription limits, deducting and paying the charge on interest paid within non-cash ISAs and reporting the market value of Money Market Fund holdings to HMRC are expected to be significant.
The estimate reflects initial impact as customers adapt to the new rules ahead of a steady state.
Estimated ongoing impact on transitional business costs (£ million)
| One-off impact | (£ million) |
|---|---|
| Costs | 0.2 |
| Savings | — |
This measure is not expected to disproportionately impact civil society organisations.
This measure is expected to impact ISA managers’ experience of dealing with HMRC as it will require them to familiarise themselves with the new rules and develop appropriate systems to apply them.
The government has deferred the implementation of ISA Digitalisation to April 2028 to allow ISA managers to focus on implementing the new ISA rules.
Operational impact (£ million) (HMRC or other)
HMRC will need to implement changes to its IT systems to support delivery of this measure, with current estimates placing these changes at around £0.2 million. This investment forms part of the wider Digitalisation of ISAs (DISA) programme.
Other impacts
Other impacts have been considered and no significant impacts have been identified.
Monitoring and evaluation
The measure will be monitored through information provided by ISA managers, existing ISA reporting returns and ongoing stakeholder engagement.
Further advice
Email: frances.larke@hmrc.gov.uk.
Declaration
Lucy Rigby MP, Economic Secretary, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.