ISA changes 2027 will affect Cash ISA limits, transfers, uninvested cash and money market funds from 6 April 2027.
The best-known change is a reduction in the annual Cash ISA limit for people under 65. However, the reforms also affect transfers between different types of ISA, cash held inside Stocks and Shares ISAs and portfolios invested entirely in money market funds.
This guide explains the planned ISA changes for 2027, who they affect and what investors may need to consider.
At a glance: The overall ISA allowance will remain £20,000. The main change is that most people will only be able to place £12,000 of that allowance into a Cash ISA each tax year.
ISA changes 2027: what is changing?
From 6 April 2027:
| ISA rule | Up to 5 April 2027 | From 6 April 2027 |
|---|---|---|
| Overall annual ISA allowance | £20,000 | £20,000 |
| Cash ISA limit — under 65 | Up to £20,000 | £12,000 |
| Cash ISA limit — aged 65 or over | Up to £20,000 | £20,000 |
| Stocks and Shares ISA limit | Up to the overall £20,000 allowance | Up to the overall £20,000 allowance |
| Lifetime ISA allowance | £4,000 | £4,000 |
| Junior ISA allowance | £9,000 | £9,000 |
The overall ISA allowance is therefore not being reduced. An investor under 65 could still use the full £20,000 allowance, but no more than £12,000 could be subscribed to a Cash ISA.
For example, someone could place:
- £12,000 into a Cash ISA; and
- £8,000 into a Stocks and Shares ISA.
Alternatively, they could invest the full £20,000 into a Stocks and Shares ISA.
The government has said that the overall ISA, Lifetime ISA and Junior ISA limits will remain at their current levels until at least 5 April 2031.
ISA rules before and after April 2027
The table below compares the current rules with the main changes taking effect under the ISA changes 2027 reforms. Some implementation details remain subject to final regulations.
| Rule | Up to 5 April 2027 | From 6 April 2027 |
|---|---|---|
| Transfer from a Stocks and Shares ISA to a Cash ISA | Permitted | Restricted for people under 65 |
| Interest on cash inside a Stocks and Shares ISA | No specific 22% charge | Subject to the planned 22% charge |
| ISA invested entirely in money market funds | Permitted, subject to existing ISA rules | No longer permitted under the planned rules |
| Cash ISA to Stocks and Shares ISA transfer | Permitted | Still permitted |
Why is the Cash ISA limit being reduced?
The government’s stated objective is to encourage more people to invest rather than hold all their long-term savings in cash.
Cash can be appropriate for emergency funds and money needed over shorter periods. However, investing may offer stronger long-term growth potential, although investments can fall in value and returns are not guaranteed.
To prevent people from bypassing the new £12,000 Cash ISA limit, the government is also introducing rules covering cash and cash-like investments held inside other types of ISA.
Will cash held in a Stocks and Shares ISA be taxed?
Investors will still be allowed to hold cash inside a Stocks and Shares ISA.
However, interest paid on cash held inside Stocks and Shares and Innovative Finance ISAs will be subject to a flat-rate charge of 22% from April 2027.
The charge will be paid to HMRC by the ISA provider. Individual investors will not be expected to declare the interest to HMRC, and the Personal Savings Allowance will not apply to it.
This is important because many investment platforms currently pay interest on:
- money waiting to be invested;
- proceeds from recently sold investments;
- cash retained to cover platform fees; and
- cash deliberately held as part of a portfolio.
The practical effect may depend on how each platform implements the rules. Providers could reduce the net interest passed to customers or change the way they manage uninvested cash.
ISA changes 2027: UKMoneyLab view
The change should not stop investors from temporarily holding cash inside a Stocks and Shares ISA.
However, leaving a large balance in cash for an extended period may become less attractive. Investors comparing platforms may increasingly need to consider both the interest rate advertised and the amount received after the new charge has been accounted for.
What is changing for money market funds?
Money market funds invest in short-term debt instruments and are commonly used as relatively low-risk, liquid alternatives to cash.
Under the new rules, a Stocks and Shares ISA or Innovative Finance ISA will not be allowed to consist entirely of investments classified as cash-like.
The government initially intends to treat money market funds as the relevant cash-like investments.
Money market funds can still form part of a diversified portfolio, but an ISA invested 100% in money market funds would contain non-qualifying investments under the new rules.
This could matter to investors who currently use a Stocks and Shares ISA mainly as a tax-efficient home for a money market fund.
Providers will be expected to help affected customers either:
- sell and reinvest the holding inside the ISA; or
- remove the non-qualifying investment from the ISA wrapper.
The detailed process may vary between platforms.
Are ISA transfer rules changing?
Yes. One of the less-publicised ISA changes 2027 introduces is a restriction on certain transfers into Cash ISAs.
For investors under 65, transfers from a:
- Stocks and Shares ISA; or
- Innovative Finance ISA
into a Cash ISA will no longer be permitted.
Transfers in the other direction—from a Cash ISA into a Stocks and Shares or Innovative Finance ISA—will continue to be allowed.
The restriction is intended to stop someone subscribing £20,000 to a Stocks and Shares ISA as cash and then transferring the entire amount into a Cash ISA.
What about people aged 65 or over?
People aged 65 or over will retain a £20,000 Cash ISA limit.
The higher limit will apply from the start of the tax year in which the person turns 65. The restriction on transfers from non-cash ISAs into Cash ISAs will also be removed for this age group.
However, the 22% charge on interest earned on cash inside a non-cash ISA and the restriction on portfolios invested entirely in money market funds will still apply.
Have the new ISA rules been finalised?
The underlying policy has been announced, but the detailed regulations were still undergoing technical consultation when this article was published.
HMRC published draft legislation on 16 July 2026, with the consultation closing at 11:59pm on 2 August 2026. The government expects the regulations to be laid in autumn 2026 and implemented from 6 April 2027.
Some technical details could therefore change before the final regulations are made.
UKMoneyLab will update this guide when the final rules and provider implementation plans become available.
What should investors do now?
There is no immediate need to move or close an ISA because the changes do not begin until April 2027.
Before then, investors may wish to:
- review how much they normally contribute to Cash ISAs;
- check how much cash they leave uninvested inside investment accounts;
- consider whether they hold an ISA entirely in money market funds;
- avoid making investment decisions solely for tax reasons; and
- wait for their platform to explain how it will apply the new rules.
Money required in the short term or for emergencies may still be more appropriately held in cash. Investing involves risk, and the value of investments can fall as well as rise.
How will the ISA changes 2027 affect ISA platform comparisons?
These reforms create several new factors that may need to be included when comparing Stocks and Shares ISA providers:
- the interest paid on uninvested cash;
- how the 22% charge is reflected in customer interest;
- money market fund availability;
- support for transfers between ISA types;
- treatment of customers holding entirely cash-like portfolios; and
- communications and tools for managing idle cash.
UKMoneyLab will incorporate these considerations into its ISA platform comparisons as providers publish further details.
You may also find these guides useful:
- Best Stocks and Shares ISA UK
- Cheapest Stocks and Shares ISA Platforms
- Best ISA for Beginners UK
- Best ETF ISA UK
UKMoneyLab will continue monitoring the ISA changes 2027 as HMRC finalises the regulations and platforms publish their implementation plans.
Frequently asked questions
Is the overall ISA allowance falling to £12,000?
No. The total annual ISA allowance will remain £20,000.
The £12,000 limit applies to Cash ISA subscriptions by people under 65.
Can I still put £20,000 into a Stocks and Shares ISA?
Yes. Subject to how much of your overall ISA allowance you have already used, you can still contribute up to £20,000 to a Stocks and Shares ISA.
Will people over 65 have a £12,000 Cash ISA limit?
No. People aged 65 or over will retain a £20,000 annual Cash ISA limit.
Can I still keep cash in a Stocks and Shares ISA?
Yes, but interest paid on that cash will be subject to a 22% charge paid by the ISA manager from April 2027.
Can I hold a money market fund in a Stocks and Shares ISA?
Money market funds will still be permitted as part of a portfolio. However, an ISA invested entirely in money market funds will not comply with the planned rules.
When do the ISA changes start?
The changes are due to take effect from 6 April 2027.
Official sources
- HMRC: The Individual Savings Account (Amendment) Regulations 2026 technical consultation.
- HM Treasury: ISA reform 2027 anti-circumvention rules factsheet.
- HMRC: Tax-free savings newsletter 22.
This article is for general information only and does not constitute financial or tax advice. Tax treatment depends on individual circumstances and may change in the future. Investments can fall as well as rise, and you may get back less than you invest.