Autumn Budget 2025 announces tax-free savings changes

The government announced changes to tax-free savings in the Autumn Budget on 26 November 2025, including a lower cash ISA subscription limit for investors under 65 and higher Income Tax rates on savings income¹. The Treasury set out the measures in its tax-free savings newsletter, which it says is "a summary of all the announcements in the Budget on 26 November 2025 in connection with tax-free savings"¹.

The overall ISA annual subscription limit stays at £20,000 until April 2031, junior ISAs and Child Trust Funds stay at £9,000 until April 2031, and Lifetime ISAs stay at £4,000 until April 2031¹. From 6 April 2027, the annual subscription limit for a cash ISA will be £12,000 for investors under 65, while for investors aged 65 and over it remains at £20,000¹. The government says it will introduce rules to prevent circumvention of the lower limit: no transfers from stocks and shares and Innovative Finance ISAs to cash ISAs, tests to determine whether an investment is eligible to be held in a stocks and shares ISA or is "cash like", and a charge on any interest paid on cash held in a stocks and shares or Innovative Finance ISA¹. These rules apply to investors under 65¹. Industry will be consulted on draft legislation, to be made by amendments to the ISA regulations and laid before Parliament well ahead of April 2027¹.

From the 2027 to 2028 tax year, the savings basic rate rises to 22%, the higher rate to 42% and the additional rate to 47%¹. The starting rate for savings and the Personal Savings Allowance are unchanged¹. Mandatory digital reporting under digitalisation of ISAs is postponed until April 2028, with the cash limit change proceeding from April 2027 using existing reporting methods¹. HMRC says it will work with industry ahead of the start of the test period in Autumn 2026¹.

Help to Save, which provides low-income households with a 50% bonus on savings over four years, will be made permanent, and from April 2028 eligibility will be extended to include all Universal Credit claimants receiving the child or caring element¹. The government will consult on a new, first time buyer only product that provides the bonus when a person uses it to buy a house, removing the need for a withdrawal charge; it will remain possible to open a Lifetime ISA until the new product becomes available, and account holders can continue to save into an existing Lifetime ISA under existing rules indefinitely¹.

Interactive investor, an investment platform, said the cash ISA allowance will reduce to £12,000 from April 2027, that the full £20,000 allowance remains with £8,000 designated exclusively for investment purposes, and that this does not apply to those over 65². Its chief executive, Richard Wilson, said: "Cutting the cash ISA allowance is the wrong lever to pull, and has once again delayed the overall goal of ISA simplification."² The firm also reported that the freeze on income tax thresholds is extended to 2031, that salary sacrifice pension contributions above £2,000 face National Insurance from April 2029, that dividend tax rates rise by two percentage points across the board from April 2026, and that the pension tax-free lump sum remains untouched². Kent Reliance states that from 6 April 2027 the amount that can be contributed to cash ISAs will be limited to £12,000 per year for savers under 65, and that money already held in a cash ISA remains tax-free and is not affected by the new contribution limit³. Tesco Bank notes that on 26 November the government announced changes to ISA limits and rules⁵.

Why it matters for households

The cash ISA change takes effect on 6 April 2027 and applies to contributions, not to money already saved: balances already held in a cash ISA remain tax-free and are not affected by the new contribution limit³. Savers under 65 who put more than £12,000 a year into cash will have to hold the remainder in other ISA types or outside an ISA, while those aged 65 and over keep the £20,000 cash limit¹. The restriction on transfers from stocks and shares and Innovative Finance ISAs into cash ISAs, and the charge on interest on cash held in those ISAs, apply to under-65s¹. From 6 April 2027, tax on savings income outside an ISA rises: 22% at the basic rate, 42% at the higher rate and 47% at the additional rate, with the starting rate for savings and the Personal Savings Allowance unchanged¹. Help to Save's 50% bonus over four years becomes permanent, with eligibility widened from April 2028 to all Universal Credit claimants receiving the child or caring element¹. The Lifetime ISA consultation concerns a first time buyer only product; no date for its introduction has been reported¹.

What happens next

Draft legislation on the cash ISA rules will be made by amendments to the ISA regulations and laid before Parliament well ahead of April 2027, with industry consultation¹. The cash limit change proceeds from April 2027 using existing reporting methods, and mandatory digital reporting follows in April 2028, with a test period starting in Autumn 2026¹. The Lifetime ISA consultation and the Help to Save eligibility extension from April 2028 are set out in the Budget summary¹.