ISA rules are changing

Find out about the cash ISA limit changes, what they mean for your cash ISA and stocks and shares ISA, and how they could affect your savings and investments.

 

Changes to ISAs from 06 April 2027

The government have announced changes to Individual Savings Accounts (ISAs). These come into effect from 06 April 2027.

Until 06 April 2027 everyone is able to split their £20,000 ISA allowance between the available ISA types in line with the current rules.

From 06 April 2027, your overall £20,000 ISA allowance remains the same. If you’re under 65, there are new rules for cash ISAs.

Cash ISA changes

New rules for Cash ISAs if you’re under 65

From 06 April 2027, if you’re under 65, the Cash ISA limit will drop from £20,000 to £12,000.

You can still use the remaining £8,000 in other types of ISAs such as a Stocks and Shares or Innovative Finance ISA, or a maximum of £4,000 into a Lifetime ISA (LISA). We don't offer Innovative Finance ISAs or LISAs at the moment.

No changes for over 65s

If you’re 65 or older, you’ll still be able to put the full £20,000 into a Cash ISA.

Other ISA limits stay the same:

  • Lifetime ISA is £4,000 and counts as part of your overall £20,000 ISA allowance.
  • Junior ISA / Child Trust Fund is £9,000 for each child (separate to your £20,000 ISA allowance).
     

Stocks and shares ISA updates

From 6 April 2027, new ISA rules will come into effect

Interest earned on cash held within a stocks and shares ISA (or investment ISA) will be subject to a 22% flat-rate charge. The charge will be deducted and paid by the ISA manager and is not reclaimable from HMRC.

​In addition, your ISA cannot be invested entirely in Money Market Funds (MMFs). MMFs are low-risk investments that aim to provide returns similar to cash savings. You can continue to hold MMFs as part of your ISA, provided they do not make up 100% of the account.​

You will also be unable to transfer from a stocks and shares ISA to a cash ISA until the start of the tax year in which you turn 65.

You can read more about this change on the GOV.UK website.

How the interest charge affects our ISAs

Pick Your Own - we don’t pay interest on cash held in our stocks and shares ISA, so the new interest charge won’t apply. Any investment returns will remain protected from UK tax.

Ready-Made Investments - cash held for fee collection may earn interest, so customers may be affected by these changes.

How the cash-like investments change affects our ISAs

Pick Your Own - you can continue to hold Money Market Funds in your ISA, but these cannot make up 100% of your ISA.

Ready-Made Investments - these are not cash-like investments, so this does not impact these accounts.

How the ISA transfer changes could affect you

If you are over 65 - you are able to transfer to a cash ISA from a stocks and shares ISA if you wish.

If you are under 65 - you are unable to transfer from a stocks and shares ISA to a cash ISA until the start of the tax year in which you turn 65. 

Understanding the ISA changes

What does this mean for you?

The basics of good financial planning don’t change:

  • Cash savings are great for short-term goals.
  • Considering investing may help your money grow over time.

Why the changes?

The government wants to encourage more people to invest for the long term. In the 2025 Autumn Budget speech, the Chancellor highlighted that historically, investments have outperformed cash savings.

Watch your money work

While future performance isn’t guaranteed, it’s still interesting to compare cash savings performance with investment growth over a 10-year period.

Lloyds bank graph.

Sources

Savings - MoneyFacts, 12m Fixed Non-ISA rates, January 2025.

Investments - S&P Dow Jones Indices, S&P World Index (GBP). Excludes fees and does not include any dividends or reinvestment.

These figures refer to the past and past performance is not a reliable indicator of future performance. See a data breakdown of the performance in the table here.

We’ve got you covered with our range of ISAs

Share Dealing ISA

  • Invest tax-efficiently with control of your portfolio.
  • Free investing with a regular investment plan.
  • Wide range of options including shares, ETFs and bonds.
  • Investment tools to make choosing investments easy.
Share Dealing ISA

Ready-Made ISA

Let the experts do the heavy lifting with our Ready-Made Investments.

  • Invest from £50 a month or a £500 lump sum. 
  • Select from 3 levels of risk and experts will take care of the rest.
Ready-Made Investments

Invest Wise® ISA

Free investing for 18 to 25s with Invest Wise.

  • Pay no account admin fee until you’re 26.
  • No commission on regular investment plan and international trades. FX rates apply.
  • Choice of Invest Wise ISA or Invest Wise Account.
Invest Wise accounts

Thinking about ISA transfers?

Transfers keep your ISA tax benefits – but make sure you do it properly. Don’t take out the money into a normal account during the process. We can help with transfers.

If you’re considering moving money between Cash and Stocks and Shares ISAs, check if it’s right for your goals. Cash is lower risk, but inflation can eat into its buying power. Investments can potentially offer more growth if you’ve got time on your side.

Investing for longer increases the likelihood of positive returns.

Over a period of 5 years or more, investments usually give you a higher return compared to cash savings. But investments can go down as well as up in value, so you could get back less than you put in. Tax treatment depends on individual circumstances and may be subject to change in the future.

Protecting your money

The Financial Services Compensation Scheme (FSCS) protects the eligible money you hold with us.

More about the FSCS

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Important legal information

The Lloyds Bank Direct Investments Service is operated by Halifax Share Dealing Limited. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Registered in England and Wales no. 3195646. Halifax Share Dealing Limited is authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.