Major ISA changes will be introduced next year
Rachel Reeves has spelled out new ISA rules.(Image: PA)
Chancellor Rachel Reeves has set out new rules around cash ISA bank accounts.
Changes around how much certain households can place into these tax-free accounts each year will be happening next year.
It’s a blow to savers and impacts how much money they can earn in interest.
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The annual tax-free limit is being cut from £20,000 to £12,000 in 2027 – but only for people under the age of 65.
That means pensioners are being protected and will not be hit by the changes.
They will be allowed to continue taking advantage of the £20,000 rate.
The aim is to encourage more households to invest in stocks and shares instead to boost the economy.
But Ms Reeves has confirmed pensioners will be spared, under rules some may consider unfair.
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It means non-pensioner households are being advised to make the most of their ISA limit this year before the rate is slashed in 2027.
Money Saving Expert explained: “The Chancellor has confirmed the cash ISA limit will be reduced to £12,000 a year from April 2027.
“The Government hopes the change – the first cut to the cash ISA allowance since 2017 – will encourage more people to invest in stocks and shares instead.”
They added: “Aged 65 or older? There will be no change. The £20,000 cash ISA contribution limit will continue to apply.
“Aged 64 or under? Your cash ISA limit will fall to £12,000.
“This will only apply to new contributions you make from April 2027. It won’t have any impact on savings you’ve already contributed to a cash ISA up until this point.”