Monzo has urged savers to review how they use their ISA allowance before Government changes take effect in April 2027. The reform will alter how people aged under 65 can divide the existing £20,000 annual ISA allowance between cash savings and investment-based products.
The change does not reduce the total annual ISA allowance. Instead, it limits the amount that under-65s can place into cash ISAs to £12,000, while the remaining £8,000 will only be available for investment-based accounts. According to reports, savers can currently split the full £20,000 allowance between cash ISAs and stocks and shares ISAs as they choose.
Monzo Tells Savers to Make Use of the Current ISA Rules
Jo Phillips, general manager for wealth at Monzo, said customers should consider acting before the new restrictions begin. She advised savers to continue using as much of their annual ISA allowance as they can comfortably afford during the current tax year.
“My advice to savers is to keep making full use of your annual ISA allowance where you comfortably can – it remains a vital way to earn tax-free interest on your hard-earned savings,” Phillips said. She added that people under 65 can still use the full £20,000 allowance under the present rules. “But it’s worth getting ahead of next April’s changes today,” she said.
According to reports, the policy is intended to encourage more people to move some of their savings into investments rather than keeping all of their ISA money in cash. Stocks and shares have typically delivered stronger growth than cash savings over the long term. Phillips suggested that savers with more than £12,000 they wish to place into ISAs should begin researching the available options. She also said people could consider starting with small investments before the rule change comes into force. “Start researching your options for any savings above the proposed £12,000 cash limit, or even start investing small amounts now to build that habit for the future,” she said.
Monzo Says Investment Access Needs to Be Simpler
Phillips also argued that encouraging more people to invest will depend on making investment services easier to understand and use. She said millions of people continue to hold money in cash because they lack confidence or support when considering investment products.
According to reports, Monzo has sought to reduce those barriers by allowing customers to begin investing with as little as £1. The bank also offers automated features that allow users to make smaller, repeated contributions. Phillips said a third of Monzo customers were first-time investors when the bank launched its investment service, while more than half of those customers now invest every 30 days.
Monzo customers can access a stocks and shares ISA or a general investment account, although they must hold a Monzo current account to use those investment products. Phillips said wider policy should also allow financial firms to use technology, personalised support and real-time financial information to help customers manage their long-term finances. Her comments come as the bank continues to encourage savers to prepare for the April 2027 ISA changes while the current £20,000 allocation rules remain in place.
