Cash ISA Limit Saved At £20,000: What Savers Should Do Before April 2027
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The cash ISA limit stays at £20,000. Budget 2026 (28 October 2026) cancelled the planned cut to £12,000 for under-65s from 6 April 2027. The bigger change is the tax on savings held outside an ISA: from 6 April 2027 that interest will be taxed at 24%, 44% or 49%, so unused 2026/27 allowance now costs more.
This matters for the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027. Below you will find how much allowance you have left, when moving money into a cash ISA makes a measurable difference to your tax bill, and the timing problem that catches people holding fixed-rate bonds.
What did Budget 2026 change for cash ISAs?
At Budget 2025 the government announced that from 6 April 2027 savers under 65 would be able to put no more than £12,000 of their £20,000 annual ISA allowance into cash. Savers aged 65 and over would have kept the full £20,000.
The Budget 2026 document published by HM Treasury on GOV.UK reverses that. It states that the government has decided not to reduce the cash ISA limit, so it remains at £20,000, and that the annual cash ISA subscription limits are retained at £20,000. The Treasury's own costing puts the price of that decision at £5 million in 2027/28, rising to £70 million a year by 2031/32, which is a fair measure of the tax savers are now expected to keep.
One point on firmness. ISA subscription limits are set by the Individual Savings Account Regulations 1998 on legislation.gov.uk, not by the annual Finance Act, so the 2027/28 position is formally fixed when amending regulations are made. For 2026/27 nothing has changed: the £20,000 cash limit is already the law. The anti-avoidance rules that were designed to support the £12,000 cap, such as a charge on cash held inside stocks and shares ISAs, are not dealt with in the main Budget document, so check the current HMRC position before you rely on either way.
How much ISA allowance do you have left for 2026/27?
Your ISA allowance is the total new money you can pay into all your adult ISAs between 6 April 2026 and 5 April 2027, and for 2026/27 it is £20,000.
The GOV.UK guide to Individual Savings Accounts confirms you can put it all into one account or split it. A few rules decide how much you really have left:
● Every payment into a cash, stocks and shares, innovative finance or Lifetime ISA counts towards the same £20,000. A Lifetime ISA payment of up to £4,000 is part of the £20,000, not extra.
● Since 6 April 2024 you can pay into more than one cash ISA in the same tax year, which also makes it easier to overpay without noticing.
● Transferring an existing ISA to another provider does not use any allowance, provided it is done as a transfer and not a withdrawal and repayment.
● Money taken out of a non-flexible ISA cannot be put back without using fresh allowance. A flexible ISA lets you replace withdrawals within the same tax year.
● Unused allowance cannot be carried forward. At the end of 5 April 2027 (a Monday) whatever is unused is gone.
If you pay in more than £20,000 across providers, HMRC identifies the excess from the returns ISA managers send it, and the excess and the income on it lose their tax-free status. Add up every payment since 6 April 2026 before you top up.
You and a spouse or civil partner each have your own £20,000. ISAs cannot be held jointly, but money given between spouses is not a taxable event, so a couple can shelter £40,000 in 2026/27.
Interactive UK Savings Tax & Cash ISA Dashboard
This interactive dashboard helps you understand how the upcoming UK savings tax rate increases and the retained £20,000 Cash ISA limit will impact your wealth from April 2027. Simply input your current savings balance, interest rate, and income tax band to instantly calculate your projected tax bill and see exactly how much you could save by utilising your ISA allowance. By adjusting the sliders, you can visualise the difference in your take-home interest inside versus outside an ISA through clear, comparative charts. Use this tool to make informed financial decisions and ensure you maximise your tax-free allowances before the end of the tax year.
Why the savings tax rise matters more than the ISA headline
Under the Budget 2026 document (paragraph 6.247), the rates of Income Tax on savings income will be 24% at the basic rate, 44% at the higher rate and 49% at the additional rate from 6 April 2027, across the whole of the UK. Budget 2025 had already added 2 percentage points; Budget 2026 adds a further 2.
Interest held | 2026/27 (to 5 April 2027) | 2027/28 (from 6 April 2027) |
Outside an ISA, basic rate | 20% | 24% |
Outside an ISA, higher rate | 40% | 44% |
Outside an ISA, additional rate | 45% | 49% |
Inside a cash ISA, any band | 0% | 0% |
Three allowances still protect interest outside an ISA, and HMRC's guidance on tax on savings interest sets them out. Your Personal Allowance of £12,570 covers interest if your wages or pension have not used it. The starting rate for savings is a 0% band of up to £5,000, reduced by £1 for every £1 of other income above your Personal Allowance, so it disappears once that income reaches £17,570, as HMRC's Savings and Investment Manual at SAIM1112 explains. The Personal Savings Allowance (PSA) then covers £1,000 of interest a year for a basic rate taxpayer, £500 for a higher rate taxpayer and nothing for an additional rate taxpayer. None of these changes with the Budget.
The Treasury says that 84% of Income Tax payers will be unaffected by the higher savings and property rates in 2027/28, and that a basic rate taxpayer would need more than £25,000 of savings outside an ISA, earning 4%, before paying any tax on it. My Tax Accountant's reading of those figures is that the rise falls mainly on higher and additional rate taxpayers with cash outside ISAs, and on retired people with large deposits whose PSA is quickly used up.
If you are a Scottish taxpayer, your wages are taxed at Scottish rates but your savings interest is taxed at the UK savings rates above, so the 24%, 44% and 49% rates apply to you too. Whether you get the £1,000 or the £500 PSA is decided by the UK higher rate threshold of £50,270, not by the Scottish bands. Welsh taxpayers are treated the same as taxpayers in England for savings.
What does using the allowance save in pounds?
Example: a higher rate taxpayer in England earning a salary of £70,000 holds £60,000 in an easy-access savings account outside any ISA, earning 4% a year, and has paid nothing into an ISA in 2026/27. The 4% rate is assumed to stay the same throughout.
Position | Interest outside ISA | Less £500 PSA | Tax at 40% (2026/27) | Tax at 44% (2027/28) |
No action | £2,400 | £1,900 | £760 | £836 |
£20,000 moved into a cash ISA before 5 April 2027 | £1,600 | £1,100 | Not applicable | £484 |
On these figures the saver pays £352 less tax in 2027/28 (£836 minus £484), and the £800 a year earned inside the ISA is tax-free in every later year as well. The saving in 2026/27 itself depends on when in the tax year the money moves, because only interest credited after the move is sheltered.
The answer changes once your interest outside an ISA sits inside your allowances. A basic rate taxpayer with £20,000 at 4% earns £800 of interest, which is below the £1,000 PSA, so moving it into a cash ISA saves no tax in either year. The case for using the allowance in that position is longer term: allowance used in 2026/27 shelters that money permanently, while allowance left unused is lost.
The video with this article works through this example step by step. Its conclusion is that the 4 point rate rise roughly adds 10% to the tax a higher rate saver pays on non-ISA interest, and that the 2026/27 allowance is the only part of the decision with a hard deadline.
Does interest on your savings change which tax band you are in?
Yes, and this is where people are most often surprised. Savings interest outside an ISA is added to your other income, so it counts towards your adjusted net income (your total taxable income less certain reliefs such as pension contributions). ISA interest does not count at all.
That has three knock-on effects. Interest that takes your income above £50,270 makes you a higher rate taxpayer and cuts your PSA from £1,000 to £500. Interest that takes your adjusted net income above £60,000 brings in, or increases, the High Income Child Benefit Charge. Above £100,000, your Personal Allowance is reduced by £1 for every £2 of extra income. If you are within a few thousand pounds of any of these thresholds, moving cash into an ISA can save more than the rate on the interest alone would suggest.
The fixed-rate bond timing problem
Bank and building society interest is taxed in the tax year it is paid or credited to you, not as it builds up. A fixed-rate bond that pays all its interest at maturity puts every year's interest into the single tax year in which it matures.
Example: a higher rate taxpayer opened a two-year fixed-rate bond of £30,000 in May 2025 at 4.5%, with interest paid at maturity in May 2027. The full £2,760 of interest falls into 2027/28. After the £500 PSA, £2,260 is taxed at 44%, giving tax of £994.40. Had the same bond paid interest annually, the interest would have been split across two tax years, used two years of PSA and been partly taxed at 40%.
You usually cannot change the interest terms of a bond once it is open, but you can check maturity dates now. If a bond or notice account matures before 5 April 2027, the proceeds can go into a cash ISA within your remaining allowance. Interest earned on a fixed-rate cash ISA is never taxed, whenever it is paid.
The UK Savings Tax & Cash ISA Planner
What to do before 5 April 2027
Now: total every ISA payment you have made since 6 April 2026 across all providers, using statements or apps, so you know your remaining allowance.
Now: list your savings outside ISAs with their interest rates and the dates interest is paid, especially any bond maturing after 6 April 2027.
By 31 January 2027: if you file Self Assessment, include all 2025/26 savings interest on your return and pay the balance due, along with any first payment on account for 2026/27.
By late March 2027: make any ISA payment or transfer. Providers set their own cut-off times, and Easter falls on 26 to 29 March 2027, so do not leave it until 5 April.
From 6 April 2027: your new £20,000 allowance begins. When HMRC issues your 2027/28 tax code, check any adjustment for savings interest, because HMRC estimates it from figures banks report and the estimate can be out of date.
When you should get the numbers checked
Most people with savings only can follow the steps above alone. The analysis gets harder when savings interest combines with rental profits, self-employment income or dividends, when interest could push you across £50,270, £60,000 or £100,000, or when HMRC has already changed your tax code or sent a Simple Assessment for interest you think is wrong. At that point the order in which your income is taxed decides the answer, and a small error in one figure can move you into a different band.
My Tax Accountant's personal tax planning service looks at your 2026/27 income across every source, models your 2027/28 position at the new savings rates, confirms how much ISA allowance you have used, and prepares and files your Self Assessment return with the savings interest correctly reported. Whether to hold cash or invest, and which product to use, is a financial product decision for a suitably qualified and regulated financial adviser.
FAQs
I turn 65 in 2027. Does my age matter for my cash ISA limit now?
No. The age distinction only existed because of the planned £12,000 cap for under-65s. With that cap cancelled at Budget 2026, every adult saver keeps the same £20,000 cash ISA limit in 2026/27 and from 6 April 2027, whatever their age.
Can my 16 or 17 year old still open a cash ISA?
No. The minimum age for a cash ISA rose to 18 from 6 April 2024, and the transitional arrangements for 16 and 17 year olds ended on 5 April 2026. Under-18s can save in a Junior ISA instead, which has its own limit of £9,000 for 2026/27, separate from your £20,000.
Do I have to declare cash ISA interest on my Self Assessment tax return?
No. Interest earned inside an ISA is exempt from Income Tax, so it does not go on your return and does not count towards your adjusted net income or your Personal Savings Allowance. Only interest from accounts outside an ISA needs reporting.
Does the April 2027 rise also affect my share dividends?
No, the 24%, 44% and 49% rates apply to savings income such as interest, not to dividends. Dividend tax rates rose separately from 6 April 2026, to 10.75% for basic rate and 35.75% for higher rate taxpayers, with the additional rate staying at 39.35%. Dividends inside a stocks and shares ISA remain tax-free.
I don't file a tax return. How will HMRC collect tax on my bank interest?
Banks and building societies report the interest they pay to HMRC. If you are employed or receive a pension, HMRC usually collects tax on the interest by changing your tax code; otherwise it may send you a Simple Assessment bill. If your savings interest is above £10,000 a year you need to register for Self Assessment.
Should I hold back my allowance for the new stocks and shares ISA incentive?
The Budget only says the government will work with the investment industry to explore an incentive for first-time stocks and shares ISA investors, with the design still to be developed. No start date has been announced. Because 2026/27 allowance cannot be carried forward, waiting for an undefined scheme means losing allowance that is available to you now.
About the Author
Maz Zaheer, AFA, MAAT, MBA, is the CEO and Chief Accountant of MTA and Total Tax Accountants, two premier UK tax advisory firms. With over 15 years of expertise in UK taxation, Maz provides authoritative guidance to individuals, SMEs, and corporations on complex tax issues. As a Tax Accountant and an accomplished tax writer, he is renowned for breaking down intricate tax concepts into clear, accessible content. His insights equip UK taxpayers with the knowledge and confidence to manage their financial obligations effectively.
Disclaimer:
This article explains the general position for the 2026/27 tax year and is accurate at the date of publication. Tax outcomes depend on individual circumstances, and rules change. It is not advice for your situation. For guidance on your own position, speak to a qualified accountant or tax adviser. My Tax Accountant accepts no liability for action taken solely on the basis of this article.
