Under 65? Here’s what the Autumn Budget ISA reforms mean for you
In the Autumn Budget, the chancellor announced upcoming reforms that will affect ISA savers under 65. Will ISAs still be an efficient way to save and invest? Read all you need to know here.
On 26 November 2025, the chancellor stood up in parliament to deliver her Budget. Against a backdrop of a cost of living crisis, geopolitical conflict, and a “£22 billion black hole” in the public finances, Rachel Reeves announced numerous measures intended to raise taxes.
Many of these may affect your wealth in the future, including a significant shift in the way Individual Savings Accounts (ISAs) function for savers under 65.
Keep reading to learn what the chancellor announced and how these new rules could affect your savings.
In an effort to incentivise investment, there will be a new cap on Cash ISA contributions from April 2027
For the upcoming tax year (2026/27), the rules for saving into ISAs will remain the same:
- You can pay up to £20,000 into your adult ISAs each tax year, including Stocks and Shares and Cash ISAs.
- Lifetime ISAs (LISAs) are also included in the scope of the £20,000 limit – savers can pay up to £4,000 of their allowance into a LISA each year, with the government topping it up by 25%. The government is reviewing the LISA and may announce changes to its structure or purpose in the future.
- You can choose how to allocate your £20,000 allowance. For instance, you could pay the full amount into your Cash ISA, or spread it out among several accounts.
From 6 April 2027, though, these rules will change for under-65s:
- You will still have a £20,000 allowance, but further restrictions will apply to how you may allocate it.
- Cash ISA contributions will be capped at £12,000, with the remaining £8,000 reserved for investment ISAs only.
- You will still be able to invest more than £8,000 within an ISA if you wish.
- As an example, you could pay £10,000 into your Stocks and Shares ISA and the remaining £10,000 into your Cash ISA. However, you could not pay £15,000 into a Cash ISA and leave only £5,000 for investments.
- Once you are 65 or older, the pre-existing rules will apply.
Through this measure, the government hopes to incentivise British savers to invest more of their wealth rather than sticking to the “safe haven” of cash – especially those who are approaching retirement.
Indeed, while having cash savings on hand is important for individuals and families, allocating a portion of your wealth to investments could help you achieve better growth. Historically, as Schroders demonstrates, cash has been eroded by inflation more consistently than equities, which have reliably outpaced inflation over the long term.
As such, the upcoming ISA reforms could encourage you to invest consistently. It could be beneficial to take professional advice if you are new to retail investing.
With savings, investments, and pensions set to be taxed more heavily, ISAs are an important tool
Although you might feel disappointed or frustrated by the upcoming restrictions on the Cash ISA, remember that ISAs are tax-efficient vehicles that could still help you achieve your goals.
When you save or invest within an ISA:
- You won’t pay Capital Gains Tax (CGT) or Dividend Tax on investment profits
- Your savings interest won’t attract Income Tax.
Plus, when you withdraw from these accounts, you won’t be taxed either. Bear in mind that ISAs do count towards your estate for Inheritance Tax (IHT) purposes.
Finding ways to save and invest tax-efficiently has never been more crucial, especially in light of this year’s Autumn Budget. Here are some of the ways your non-ISA wealth is set to be taxed more heavily in future.
- Pensions will become subject to IHT from April 2027 – At the time of writing, your pension won’t form part of your estate for IHT purposes when you pass away, enabling you to pass more wealth down tax-free. But from 6 April 2027 onwards, they will be caught in the IHT net.
- Tax for landlords, non-ISA savers, and some dividend earners is going up by 2% – Perhaps the most notable Budget announcement was that those taking an income from properties, receiving dividends at the basic or higher rate, or earning interest on cash savings outside of an ISA will all see their Income Tax bill rise by 2%.
- Several important tax thresholds are now frozen until 2031 – Previously fixed until 2028, the Personal Allowance and Income Tax thresholds have now been frozen until 2031 rather than rising with inflation. As your earnings rise, more could be dragged into a higher tax bracket.
Read our Autumn Budget update for a full breakdown of the chancellor’s statement.
Being prepared for these changes is crucial. Our award-winning team can offer guidance in light of the chancellor’s Budget announcements and help you plan ahead for a bright future.
Get in touch
To discuss the ISA reforms or anything else you have read about here, get in touch with our team today. Email us at hale@kelland.co.uk or call 0161 929 8838.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning or estate planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.