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Investments Taxation 

Cash ISA allowance reduced for under 65s

Amy Woolliscroft3rd December 2025
Corporate Social Responsibility

As widely anticipated, it was announced in the Budget on Wednesday 26th November that there will be a reduction in the annual allowance for Cash Individual Savings Accounts with effect from 6 April 2027.

The maximum amount that will capable of being paid into a Cash ISA, per individual, from that date will be reduced to £12,000 (within the overall annual ISA limit of £20,000).

This does not apply for individuals over the age of 65 in the tax year of subscription. For over 65s, the annual subscription limit for Cash ISAs will remain at £20,000.

The annual subscription limits will remain at £20,000 for Stocks and Shares ISAs.

These allowances are frozen until 5th April 2031, and will come into effect for tax years from and including 2027/28.

And if you have other savings…

The Chancellor also announced a 2% increase on the basic, higher, and additional rates of income tax on savings income, raising the tax rates to 22%, 42% and 47% respectively. The changes will come into effect from 6th April 2027.

Do you know what your Personal Savings Allowance is?

You can earn savings interest tax-free of £1,000, in a tax year, if you are a basic rate taxpayer, £500 if you are higher rate and, £0 if you’re additional rate. Any amount of interest that you earn in excess of the Personal Savings Allowance will then be taxed at the appropriate rate.

What should you do next?

To help avoid or mitigate the personal savings income tax you should consider using your ISA allowances in the current tax year and then in the new tax year, from 6th April 2026. There are also other financial planning options that might be suitable, which would help your savings work in a tax efficient manner.

You could also read our latest Stocks & Shares ISA v Cash ISA guide here.

To understand more about your options then please contact us here.

The value of an ISA with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise.  You may get back less than you invested. An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA.

The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.

SJP approved 3/12/2025