Technical consultation on the draft ISA amending legislation opens

The government has published draft legislation amending the Individual Savings Account Regulations 1998, and a technical consultation on the draft and its operational consequences ran between 25 June and 2 August 2026¹. The Individual Savings Account (Amendment) (No. 2) Regulations 2026 were prepared by HM Revenue and Customs on behalf of HM Treasury and laid before the House of Commons¹. The instrument extends to, and applies in, the United Kingdom¹.

The change was first announced at Autumn Budget 2025. From 6 April 2027, investors aged 64 or under at the end of the tax year may subscribe only £12,000 to a Cash ISA in that year, within the overall annual ISA limit of £20,000¹. For investors aged 65 or over, the annual Cash ISA limit remains at £20,000¹. Currently up to £20,000 can be subscribed annually and the rules do not differentiate between Cash, stocks and shares and innovative finance ISAs¹.

The draft regulations also introduce rules intended to stop the lower limit being avoided¹:

The government set out its reasoning in the memorandum:

On the treatment of older savers, the memorandum states that "in recognition of the need of those approaching retirement to restructure and derisk their investments, the Government has retained the Cash ISA limits at £20,000 for those aged 65 and above and will allow transfers into Cash ISAs for this group"¹. The anti-circumvention rules are intended to prevent the reduced limit being avoided by holding large cash balances or cash-like products inside non-cash ISAs, or by routing subscriptions through non-cash ISAs before transferring them into Cash ISAs¹.

On the consultation itself, the memorandum says limited comments were received on the text of the amending legislation, with most comments concentrating on the policy decision, and that technical comments received have informed the drafting¹. HMRC's guidance notes for ISA managers will be amended to reflect the changes¹. The memorandum states that the impact on businesses offering ISAs is significant, with ISA managers required to monitor subscriptions against the new limit¹.

Why it matters for households

From 6 April 2027, savers aged 64 or under at the end of the tax year will be able to put no more than £12,000 into a Cash ISA in that year, while the overall ISA limit stays at £20,000¹. The remaining £8,000 of the overall allowance can still go into a stocks and shares or innovative finance ISA¹. Savers aged 65 or over keep the £20,000 Cash ISA limit and can still transfer from a stocks and shares or innovative finance ISA into a Cash ISA¹.

Two further changes affect money already held. Interest paid or credited on cash deposits held inside a stocks and shares or innovative finance ISA will attract a flat 22% charge paid by the ISA manager to HMRC¹. And for under-65s, moving money from a stocks and shares or innovative finance ISA into a Cash ISA will not be permitted¹. Money Market Funds become qualifying investments for a stocks and shares ISA but cannot make up the whole of its non-cash investments¹. Junior ISAs are excluded from the 22% charge¹.

What happens next

The consultation closed on 2 August 2026¹. The regulations take effect from 6 April 2027¹. HMRC's guidance notes for ISA managers will be updated to reflect the new limit and associated rules¹. The memorandum does not state a date for the final regulations being laid. The consultation process and how new rules are made are set out in our regulation and policy coverage, with further detail on ISAs.