Blog
Investments Taxation
Cash ISA allowance reduced for under 65s
Amy Woolliscroft3rd December 2025
As widely anticipated, it was announced in the Budget on Wednesday 26th November that there will be a reduction in the annual allowance for Cash Individual Savings Accounts with effect from 6 April 2027.
The maximum amount that will capable of being paid into a Cash ISA, per individual, from that date will be reduced to £12,000 (within the overall annual ISA limit of £20,000).
This does not apply for individuals over the age of 65 in the tax year of subscription. For over 65s, the annual subscription limit for Cash ISAs will remain at £20,000.
The annual subscription limits will remain at £20,000 for Stocks and Shares ISAs.
These allowances are frozen until 5th April 2031, and will come into effect for tax years from and including 2027/28.
And if you have other savings…
The Chancellor also announced a 2% increase on the basic, higher, and additional rates of income tax on savings income, raising the tax rates to 22%, 42% and 47% respectively. The changes will come into effect from 6th April 2027.
Do you know what your Personal Savings Allowance is?
You can earn savings interest tax-free of £1,000, in a tax year, if you are a basic rate taxpayer, £500 if you are higher rate and, £0 if you’re additional rate. Any amount of interest that you earn in excess of the Personal Savings Allowance will then be taxed at the appropriate rate.
What should you do next?
To help avoid or mitigate the personal savings income tax you should consider using your ISA allowances in the current tax year and then in the new tax year, from 6th April 2026. There are also other financial planning options that might be suitable, which would help your savings work in a tax efficient manner.
To understand more about your options then please contact us here.
The value of an ISA with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise.
An investment in equities and shares will not provide the security of capital associated with a deposit account with a bank or building society. However, please bear in mind that over the long-term inflation will erode the purchasing power of your capital.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is generally dependent on individual circumstances.
SJP does not offer Cash ISAs.
SJP approved xx/xx/xxxx