ISA Rules Changing in 2027: What Savers Need to Know Now

If you’re saving money into an ISA, pay attention — significant changes are coming in April 2027 that will affect how much you can save and how your interest is taxed.

Currently, you can put up to £20,000 into ISAs each tax year, and you have complete flexibility in how you split that money between different types: cash ISAs, stocks and shares ISAs, or Lifetime ISAs. The beauty of an ISA is that all the interest you earn and any investment growth is completely tax-free. That’s a huge advantage over regular savings accounts, where you only get a small allowance of tax-free interest before you start paying tax on the rest.

But from April 2027, things are changing. The total ISA allowance will drop from £20,000 to £12,000 per year. That’s bad news on its own, but here’s the catch: of that £12,000, you’ll only be able to choose how to allocate it freely. The remaining £8,000 will be forced into stocks and shares ISAs only. This means if you prefer the safety of a cash ISA, you won’t be able to put your full allowance there anymore.

At the same time, the government is hiking income tax rates. Tax on savings interest is going up by 2 percentage points across the board. Basic rate taxpayers will see their rate climb from 20% to 22%, higher rate taxpayers from 40% to 42%, and additional rate taxpayers from 45% to 47%.

What should you do now? If you’re a regular saver, consider maximising your ISA contributions before April 2027 while the rules are more generous. The current £20,000 allowance won’t roll over, so don’t miss out. If you’re nervous about stocks and shares, lock in a cash ISA now while you have the option.

For the latest details on ISA rules and tax changes, check the government’s official guidance on GOV.UK or speak to a financial adviser. Your bank or building society can also explain how the changes will affect your specific accounts.