The government has published further guidance on the ISA changes due to take effect from 6 April 2027. 

The key points are summarised below, with additional detail expected to be provided by the government in the next Tax-Free Savings Newsletter. 

Cash ISA subscription limit 

• A new £12,000 annual subscription limit will apply to Cash ISAs for individuals under the age of 65. 

• The existing overall ISA subscription limit of £20,000 will remain unchanged. 

• The Cash ISA restriction will cease from the start of the tax year in which an individual turns 65, allowing them to subscribe up to the full annual ISA allowance into Cash ISAs if they wish. 

Anti-circumvention Rules  

To prevent investors from bypassing the reduced Cash ISA limit, the government will introduce the following measures: 

• Tax charge on cash held within non-Cash ISAs: A 22% tax charge will apply to interest received by the ISA manager on cash holdings within Stocks & Shares ISAs and Innovative Finance ISAs (referred to as non-Cash ISAs). This charge will be paid by the ISA manager directly to HMRC and will not be charged directly to investors. This measure will continue to apply after an investor reaches age 65. 

• Restrictions on ISA transfers: Individuals under age 65 will not be permitted to transfer funds from a non-Cash ISA into a Cash ISA. This restriction will be lifted from the start of the tax year in which the investor turns 65. 

• Restrictions on cash-like assets within non-Cash ISAs: Investors will not be permitted to hold 100% of a non-Cash ISA in cash-like assets. Initially, this definition will apply only to Money Market Funds. Partial holdings in these assets will continue to be permitted. This restriction will remain in place regardless of the investor’s age. 

A technical consultation with industry on the draft legislation will commence shortly. The amending Regulations are expected to be laid in the autumn, with the new rules coming into force from 6 April 2027.