ISA rules: the £20,000 allowance and the new cash ISA limit from April 2027

ISAs are one of the simplest ways to save tax, but there are a few rules worth knowing.

What are the ISA rules now?

1. You can put in up to £20,000 per tax year across all your ISAs
2. Interest in a cash ISA is tax free, so there's nothing to pay and nothing to report
3. You can withdraw your money tax free whenever you like. However do check if your ISA will let you put back in as some aren't flexible in allowing this.

The gov.uk guide to withdrawing from an ISA says you can take your money out at any time without losing any tax benefits. If your ISA is flexible, you can take out cash and put it back in during the same tax year without it reducing your allowance, and your provider can tell you whether it is.

What changes from April 2027?

1. The rules are changing from 6 April 2027. The overall limit stays at £20,000, but if you're under 65, no more than £12,000 of it can go into a cash ISA. The rest has to go into a stocks and shares ISA or similar
2. Also from April 2027, there will be a 22% charge on the interest on uninvested cash sitting in a stocks and shares ISA. So parking spare cash there to get round the new cash limit won't work

HMRC's tax-free savings newsletter 23 says the regulations come into force on 6 April 2027. Investors aged under 65 will be able to subscribe up to £12,000 of their annual allowance to cash ISAs, and the overall limit stays at £20,000. It describes a flat-rate charge, set at the savings basic rate, on interest paid on cash held in stocks and shares and innovative finance ISAs. Under 65s will also be stopped from transferring money from those ISAs into a cash ISA.

Can you pay into an ISA if you move abroad?

1. If you move overseas and stop being UK resident, you can't pay any more money into your ISA. You can usually keep what's already in it, but a new country may tax it differently

The gov.uk guide on ISAs if you move abroad says that once you are non-resident you cannot put money into your ISA, unless you are a Crown employee working overseas or their spouse or civil partner. You can keep the ISA open and it keeps its UK tax relief.

Is this tax year the last chance for a £20,000 cash ISA?

So if you're under 65 and want the full £20,000 in cash, this tax year is your last chance.

The other allowances worth using before 5 April 2027 are in what tax planning should you do before 5 April 2027 and which allowances let you take money tax-free. If you are planning a move abroad, see you moved abroad: do you still owe UK tax.

ISA rules and your own position can change, so this is general information rather than advice on your position. If you want to plan your savings around the new limits, talk to us.