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Although the overall individual savings account (ISA) annual subscription limit of £20,000 is not changing, from 6 April 2027 the amount anyone aged under 65 will be able to save into a cash ISA each year will be capped at £12,000.
The following annual subscription limits will be frozen until 5 April 2031: If you’re aged 65 and over, the cash ISA annual subscription limit will also remain unchanged at £20,000.
From 6 April 2027, the cash ISA limit will fall to £12,000, but only for savers aged under 65. Anyone who wishes to invest over £12,000 can still do so for 2025/26 and 2026/27, but they should plan to review their future investment strategy, especially as tax rates on savings income are going to increase by two percentage points across all tax bands.
The changes only apply to new cash ISA savings from 6 April 2027 onwards, and interest on money already saved by then should continue to be tax free. The government is trying to push people to invest more in stocks and shares ISAs. However, although returns are traditionally higher, there is considerably more risk especially if you’re not investing for the longer term.
Lifetime ISAs have come in for criticism because of the 25% penalty charge which is applied to unauthorised withdrawals. The property cap of £450,000 (unchanged since Lifetime ISAs were introduced in 2017) and generally rising property prices, have prevented many from using their Lifetime ISA to help purchase a first home. The government is therefore going to consult on introducing a new ISA product which can be used to save towards a first home.
Unlike the existing Lifetime ISA, where government bonuses are paid monthly, a bonus will only be paid when the new ISA is used to purchase a home. This will allow more flexibility in regard to withdrawals should a person’s circumstances change.
