People aged 65 and over will keep a higher Cash ISA allowance under a planned tax change that will give older savers an extra £8,000 savings allowance compared with younger customers.
Cash ISA Rules Set to Change From April 2027
Former Chancellor Rachel Reeves announced changes to Cash ISA rules in the November Budget. From April 2027, the annual Cash ISA limit will fall to £12,000 for most savers. The allowance for Stocks and Shares ISAs and Innovative Finance ISAs will remain at £20,000.
The Cash ISA limit for people aged 65 and over will stay at £20,000. This means older savers will retain an additional £8,000 allowance compared with the new general limit, with savings interest remaining protected from tax within the ISA system.
Andy Burnham Government Expected to Continue Reform
Although Rachel Reeves has left the role of Chancellor, the Labour government has already set out the Cash ISA changes in official documents. The reform is expected to be introduced under Prime Minister Andy Burnham, who will oversee the transition from next spring.
The policy aims to encourage more investment through non-cash ISA products while keeping a higher savings allowance for older customers.
New Government Faces Cost of Living Questions
The Cash ISA announcement comes as Andy Burnham begins his first full period as Prime Minister. One of his first announcements was a plan to remove VAT from electricity bills, although he said the proposal currently lacks full funding.
Liberal Democrat leader Sir Ed Davey questioned whether the policy was the best way to support households facing high energy costs. He said the government needed to provide clearer financial details and called for an early Budget to set out its plans.
Autumn Budget Expected Under New Chancellor
A Budget is expected in the autumn, although a date has not yet been confirmed. New Chancellor John Healey will lead the upcoming fiscal statement. The Cash ISA changes are among the measures already announced that are expected to continue under the new government.
