You can currently save up to £20,000 across any ISA accounts you may have – but Rachel Reeves today used her Autumn Budget to confirm big changes
Rachel Reeves has finally confirmed that the cash ISA limit is being cut, following months of speculation.
Rachel Reeves used her Autumn Budget to confirm the annual cash ISA limit is being slashed to £12,000 from April 2027. There will still be an overall £20,000 ISA limit, so it means you could save £12,000 into a cash ISA and £8,000 into a stocks and shares ISA.
But over-65s won’t be affected by the new cap, and will still be able to save up to £20,000 every tax year into a cash ISA. You can currently save up to £20,000 every tax year across any ISA accounts you may have.
The Chancellor has been under pressure to encourage people to invest, but critics have cast doubt on whether this will actually change saving habits.
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Building societies have also argued that cutting the cash ISA limit could reduce the number of mortgages that are made available for customers, as they rely on deposits like cash ISAs to fund their lending.
The latest data shows that in 2023/24, the nation paid into 9.9 million cash ISA accounts.
An ISA – which stands for Individual Savings Accounts – is a type of savings account where any interest you make is free from tax. For other saving accounts, you have to pay tax on the interest above a certain amount.
If you’re a 20% basic-rate taxpayer, you can earn up to £1,000 in savings interest every tax year before you start to pay tax. This is known as your personal savings allowance.
Higher-rate 40% taxpayers have a £500 personal savings allowance, while additional rate 45% taxpayers don’t get any personal savings allowance at all.
You start to pay tax once you earn more than these amounts in interest on your savings. So for example, say you earn £1,100 in savings interest and you’re a basic-rate taxpayer.
You would not pay tax on the first £1,000, but you would pay tax on the remaining £100.
The main types of ISAs are cash ISAs, stocks and shares ISAs, Lifetime ISAs, and innovative finance ISAs. Children have their own version called Junior ISAs.
As we’ve mentioned above, you can currently save up to £20,000 across any ISA accounts you may have. However, some ISAs have lower limits – for example, you can only save £4,000 into a Lifetime ISA every tax year.
