The cash ISA limit falls to £12,000 for under-65s on 6 April 2027: which clients it reaches and what an advice firm should check

A client of 58 puts £20,000 into a cash ISA every April, as she has done for years. On 6 April 2027 that stops being possible. The annual cash ISA limit falls to £12,000 for people under 65, and the firm has about six months to work out whose plans this changes.

What HMRC has set out

HMRC's policy paper, published 17 September 2026, says the measure will reduce the annual cash ISA subscription limit to £12,000 for individuals aged under 65 from 6 April 2027, while keeping the overall ISA subscription limit at £20,000. Savers aged 65 or over keep a £20,000 cash limit. The paper also covers restrictions on transfers from stocks and shares ISAs and Innovative Finance ISAs into cash ISAs, and a flat-rate charge on interest on cash held in non-cash ISAs. The rest of the £20,000 can go into other ISA types.

The anti-circumvention factsheet, published 23 June 2026, gives the detail:

• Transfers: transfers from non-cash ISAs into cash ISAs will not be permitted.
• 22% charge: a flat-rate charge of 22% applies to any interest or alternative finance return paid on cash held within a non-cash ISA, paid by the ISA manager to HMRC.
• Money market funds: from April 2027, cash-like assets are defined as money market funds only, and they can only be a partial allocation of a non-cash ISA.
• Start date: the new rules come into force from 6 April 2027.

Neither page tells you what happens to money already in a cash ISA, and the policy paper says individuals "may need to adjust how they allocate funds between cash ISAs and non-cash ISAs". Check ISA manager guidance, which HMRC has said is still to come, before telling a client what happens to a particular account.

Which clients: the 65 test

The factsheet says entitlement to the higher cash limit "will apply from the start of the tax year in which an individual turns 65". That makes the test a birth date against the tax year, not against 6 April 2027:

• A client who turns 65 on or before 5 April 2027 is already over 65 when the new limit starts.
• A client who turns 65 between 6 April 2027 and 5 April 2028 turns 65 in tax year 2027 to 2028, so on this wording keeps the £20,000 cash limit for that year.
• So someone born on 5 April 1963 (65 on 5 April 2028) keeps the higher limit in 2027 to 2028, and someone born on 6 April 1963 (65 on 6 April 2028, the next tax year) does not.

Born on or after 6 April 1963 means the £12,000 limit applies for the whole of 2027 to 2028. A one-day difference in date of birth changes the cash room by £8,000, so use the date of birth on file, not the age in the plan, and confirm the position against the final legislation.

Worked examples

A client investing £20,000 in cash each year. From 6 April 2027, at most £12,000 can go into cash ISAs. At least £8,000 of the £20,000 must go into a stocks and shares or Innovative Finance ISA, or outside ISAs.

A couple, both under 65. Today: 2 x £20,000 = £40,000 in cash ISAs. From April 2027: 2 x £12,000 = £24,000 of cash room, with £16,000 of the £40,000 needing another home.

Cash held inside a stocks and shares ISA. Take £5,000 of cash earning 4%, which is £200 a year (the 4% is our assumption for the example). The 22% charge is £44. The factsheet describes the charge as paid by the ISA manager, so check how the manager's terms deal with it; the client may bear it.

A stocks and shares ISA moved into cash. A client under 65 who now sells down a stocks and shares ISA to cash will not be able to transfer it into a cash ISA from April 2027. Such a switch is still possible up to 5 April 2027, so it belongs in the client-list check below.

The time left

From 8 October 2026 to 5 April 2027 is 179 days. That is the window left in which the current rules apply, so any plan that depends on them, such as the switch above, has to be made inside it.

A client-list check

1. Export every client with a cash ISA and their date of birth.
2. Mark anyone born on or after 6 April 1963.
3. Add each person's cash ISA subscription for 2025 to 2026 and the plan for 2026 to 2027.
4. List anyone whose cash subscription exceeds £12,000.
5. List anyone holding cash in a stocks and shares ISA, and the amount.
6. Note the reason for each decision on the client file, with the date.

The annual review checklist is the natural place to record it, and the ongoing service review tracker shows which reviews fall before April. For a firm that also works through tax-year deadlines on pensions, the carry forward guide is the companion, and the capacity calculator shows what extra reviews cost in adviser time.

Overlyft builds AI staff who join an advice firm's team and get it ready for changes like this: they read the client list, flag every client whose cash ISA plan crosses the new line and draft the review note for the adviser to check and sign off, so the firm meets April with the work done.

This is general information, not advice. Check GOV.UK and the final regulations before acting for a client.