The government announced anti-circumvention rules on 23 June 2026 to support its reduction of the annual cash ISA subscription limit, according to a policy paper published by HM Revenue & Customs on 17 September 20261. The rules accompany the change, announced at Budget 2025, that from 6 April 2027 the annual cash ISA subscription limit for individuals aged under 65 falls to £12,000 within the overall ISA subscription limit of £20,0001. For investors aged 65 or over the annual cash ISA limit remains at £20,0001.
The anti-circumvention measures include restrictions on transfers from stocks and shares ISAs and Innovative Finance ISAs (non-cash ISAs) into cash ISAs, a flat rate charge of 22% on any interest paid on cash held in non-cash ISAs, rules relating to Money Market Funds, and additional reporting requirements for ISA managers1. The legislation provides that transfers from a stocks and shares ISA or innovative finance ISA to a cash ISA are prohibited where the account holder is below the age of 65, and that such a transfer can only take place where the investor is aged 65 or over at the end of the year in question2. The 22% charge is described as representative of the savings basic rate, payable by the ISA manager to HMRC2. Money Market Funds are defined as qualifying investments for a stocks and shares ISA, but cannot comprise 100% of the value of non-cash investments in a stocks and shares ISA2. The measure takes effect from 6 April 20271.
The government set out its objective for the change:
"The Government's policy objective for the change to the Cash ISA limit is to incentivise investment in stocks and shares over cash savings and encourage better returns for savers."
On the anti-circumvention rules, the government said they are intended to ensure the reduced cash ISA limit "operates as intended and cannot be circumvented, for example, by holding large cash balances or cash-like products within non-cash ISAs, or by routing subscriptions through non-cash ISAs before transferring them into cash ISAs"1.
The policy paper gives the age breakdown of cash ISA subscribers. In 2022 to 2023, 78% of cash ISA subscribers aged under 65 subscribed less than £12,000 to a cash ISA and 22% subscribed over £12,0001. Individuals aged between 55 and 64 and those aged 65 or older are estimated to be overrepresented among cash ISA subscribers (18% and 34% respectively), compared with their prevalence in the UK adult population (17% and 24%)1. Females are estimated to be slightly overrepresented (53% against 50%), as are individuals from a White English, Welsh, Scottish, Northern Irish or British ethnic background (90% against 82%), individuals with a disability among cash ISA subscribers aged 65 and over (37% against 26%), and individuals of the Christian faith (74% against 52%)1.
| Group | Cash ISA limit from 6 April 2027 |
|---|---|
| Aged under 65 | £12,000 |
| Aged 65 or over | £20,000 |
| Overall ISA subscription limit | £20,000 |
The government estimates one-off transitional business costs of £6.0 million and ongoing costs of £0.2 million1. HMRC estimates its own IT changes at around £0.2 million1. The final costing is subject to scrutiny by the Office for Budget Responsibility1. The government has deferred the implementation of ISA Digitalisation to April 2028 to allow ISA managers to focus on implementing the new ISA rules1.
Why it matters for households
From 6 April 2027, savers aged under 65 will be able to put no more than £12,000 a year into a cash ISA, while the overall ISA allowance stays at £20,000. Those aged 65 or over keep a £20,000 cash ISA limit. The government says the measure is expected to affect individuals aged 64 or under who currently subscribe more than £12,000 annually to a cash ISA, and individuals who hold cash or Money Market Funds within non-cash ISAs1. Under-65s will also be unable to move money from a stocks and shares ISA or innovative finance ISA into a cash ISA, and interest on cash held inside those non-cash ISAs will attract a 22% charge paid by the ISA manager2. The government says those affected may need to adjust how they allocate funds between cash and non-cash ISAs and the type of investments they hold1. The changes to the cash ISA limit take effect on 6 April 2027.
What happens next
A technical consultation on the draft legislation and its operational consequences ran from 25 June to 2 August 20262. HMRC's guidance notes for ISA managers will be amended to reflect the changes2. The measure will be monitored through information provided by ISA managers, existing ISA reporting returns and ongoing stakeholder engagement1.
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