Quick answer: the ISA allowance for 2026/27 is still £20,000. From 6 April 2027, three things change. People under 65 can put only £12,000 of that into a cash ISA. Under-65s can no longer transfer money from a Stocks & Shares ISA into a cash ISA. And interest paid on cash held inside a Stocks & Shares ISA will have a flat charge taken off by your provider, at the savings basic rate (22% from April 2027). If you’re 65 or over, you can still put the full £20,000 in cash ISAs. HMRC confirms the regulations were laid before Parliament on 14 September 2026 and take effect on 6 April 2027.
“HMRC cash ISA tax charge” is one of the fastest-rising money searches in the UK right now, and lots of the headlines make it sound scarier than it is. Here’s what’s actually changing, who it affects, and what (if anything) you need to do before April.
New ISA rules at a glance
| 2026/27 (now) | From 6 April 2027 | |
|---|---|---|
| Total ISA allowance | £20,000 | £20,000 (frozen until 2030) |
| Cash ISA limit, under 65 | £20,000 | £12,000 |
| Cash ISA limit, 65 and over | £20,000 | £20,000 |
| Transfer Stocks & Shares ISA → cash ISA | Allowed | Not allowed for under-65s |
| Interest on cash inside a Stocks & Shares ISA | Tax-free | Flat charge at the savings basic rate (22%), taken by your provider |
| Stocks & Shares ISA held entirely in money market funds | Allowed | Not allowed (Junior ISAs exempt) |
| Lifetime ISA | Still £4,000 a year, counts towards your £20,000 | |
ISA allowance 2026/27: what you can do now
For this tax year (6 April 2026 to 5 April 2027), nothing has changed. You can put up to £20,000 into ISAs, all in cash if you like, and you can split it across more than one ISA of the same type (GOV.UK). So if you’re under 65, mostly save in cash and can afford it, this is the last tax year you can put more than £12,000 into cash ISAs.
HMRC cash ISA tax charge: what it really is
This is the bit causing the most worry, so let’s be clear. The charge is not on cash ISAs. Your cash ISA interest stays tax-free.
The charge applies to interest paid on cash sitting inside a Stocks & Shares ISA (or an Innovative Finance ISA). HMRC says it’s “a flat-rate charge, set at the savings basic rate”. The savings basic rate rises to 22% from April 2027, which is where the 22% in the headlines comes from. Your ISA provider works it out and takes it off. You don’t need to declare anything or fill in a tax return for it.
Why? The government wants people under 65 to save more in cash ISAs only up to £12,000, and to use Stocks & Shares ISAs for investing. The charge stops people using a Stocks & Shares ISA as a back door to hold extra cash tax-free.
HMRC stocks and shares ISA charge: who’s affected?
- Invested funds and shares: the new charge concerns interest on cash, not the value of your investments. Its impact depends on how much cash you hold and the interest paid.
- People who park large amounts of cash in a Stocks & Shares ISA will notice it most. 22% of the interest goes, so a £10,000 cash balance earning 4% (£400 a year) would lose about £88.
- Anyone using money market funds as their whole ISA: from April 2027, a Stocks & Shares ISA can’t be made up entirely of money market funds. Exactly how these funds are treated is still being finalised.
That £10,000 example is just to show the maths. It’s not a rate you’ll necessarily get.
New ISA rules on transfers
From 6 April 2027, if you’re under 65, you won’t be able to move money from a Stocks & Shares ISA (or Innovative Finance ISA) into a cash ISA. You can still move cash ISA money into a Stocks & Shares ISA, and you can still switch cash ISAs to get a better rate.
If you plan to transfer a non-cash ISA into a cash ISA, check the position with your provider before April 2027. Selling investments and holding the proceeds as cash inside the same Stocks & Shares ISA is a different action. Always use the official ISA transfer process. If you withdraw the money yourself, it loses its ISA wrapper and uses up new allowance when you pay it back in, unless your ISA is flexible.
Breaking ISA rules: what happens if you get it wrong?
The most common mistake is paying in more than your allowance. With the new £12,000 cash limit, it’ll be easier to slip up, for example £10,000 in one cash ISA and £5,000 in another.
- HMRC gets reports from every ISA provider, so it spots overpayments.
- It will usually contact you, and the extra money (and any interest it earned) can lose its tax-free status.
- If you think you’ve overpaid, contact your provider or the ISA Helpline straight away. Fixing it early is far easier.
A simple habit: keep a note on your phone of every ISA payment each tax year, with the account and the amount. It takes ten seconds and stops any mix-ups.
What I’d do before April 2027: checklist
- Under 65 and a cash saver? Review your allowance before 5 April 2027, while keeping money available for bills, debt repayments and emergencies. You do not need to save the maximum.
- Check your Stocks & Shares ISA for idle cash. Log in and look at the cash balance. Decide whether it should be invested, or moved to a cash ISA before April.
- Planning an ISA transfer? Check the new rules with your provider. The restriction concerns transfers into a cash ISA; it does not require you to sell investments or prevent holding cash inside a Stocks & Shares ISA.
- Keep an emergency fund in easy access. None of this changes the basics. Keep 3 to 6 months of costs somewhere you can get at quickly.
- Not sure? MoneyHelper has free, impartial guidance on ISAs.
New ISA rules FAQs
Will my cash ISA be taxed?
No. Interest in a cash ISA stays tax-free. The charge is only on interest paid on cash held inside Stocks & Shares and Innovative Finance ISAs.
Do I lose money already in my cash ISA?
No. The £12,000 limit is on how much under-65s can pay in each year from April 2027. Money you already have in cash ISAs stays there, tax-free.
I turn 65 next year. Which limit applies?
Savers aged 65 and over keep the full £20,000 cash limit. HMRC’s guidance for providers will set out exactly how age is checked. It’s due before April 2027, and I’ll update this post when it’s out.
Does this affect Junior ISAs or Lifetime ISAs?
The cash limit change doesn’t mention Junior ISAs (£9,000 a year), and the money market fund rule specifically excludes them. The Lifetime ISA limit stays at £4,000 a year, counting towards your £20,000.
Has Andy Burnham’s government changed the cash ISA rules?
Not so far. The changes were announced by Rachel Reeves at the 2025 Budget, and the new government has carried them on. The rules were laid before Parliament on 14 September 2026 and start on 6 April 2027 (HMRC). The next thing to watch is the Budget on 28 October 2026. I’ll update this post if anything changes.
What is the “Reeves ISA levy”?
It’s the nickname for the 22% charge on interest earned by cash held inside Stocks & Shares ISAs, explained above. It doesn’t apply to cash ISAs.
Is the £20,000 allowance changing?
No. It stays at £20,000 and is frozen until 2030. It’s how you can split it that changes.
What to do next
For most people these changes are smaller than the headlines suggest. Your cash ISA stays tax-free, and the 22% charge only bites if you keep a lot of cash inside a Stocks & Shares ISA. The one deadline that matters is 5 April 2027: it’s the last day under-65s can put more than £12,000 into cash ISAs in a year, and the final day before the new restriction on transfers into cash ISAs begins. For the basics, read my ISAs explained guide.
Last checked: 21 October 2026 against GOV.UK and HMRC. This is general information, not financial advice. If you’re unsure what’s right for you, speak to MoneyHelper or a regulated financial adviser.
Official checks: HMRC savings tax rates from April 2027; Junior ISA allowance.
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About the author: Dr Kalpana Govindaraasan is the PhD scientist, former secondary science teacher and mum behind MoneySavvyUK, turning complex household money topics into practical steps.