Will Cash ISAs be taxed from 2027?
No. Interest earned inside a Cash ISA stays tax-free, and nothing in the Budget on 28 October 2026 puts a tax or charge on it. The planned £12,000 limit was cancelled. What does rise is tax on savings interest outside an ISA, to 24%, 44% and 49% from 6 April 2027.
The short answer
- No. Interest earned inside a Cash ISA stays tax-free, and the Budget on 28 October 2026 did not change that.
- The planned £12,000 Cash ISA limit for under-65s was cancelled. The limit stays £20,000 at every age.
- Tax on savings interest outside an ISA rises to 24%, 44% and 49% from 6 April 2027, so the tax-free wrapper saves more for anyone who pays tax on that interest.
- A planned 22% charge on cash inside Stocks and Shares ISAs is unconfirmed. It never applied to Cash ISAs.
Will Cash ISAs be taxed?
No. Interest, dividends and growth inside an ISA stay free of tax, and the Budget on 28 October 2026 did not change that. It cancelled the planned cut of the Cash ISA limit to £12,000, so the limit stays £20,000 for everyone over 18. See the Cash ISA limit.
Was the 22% charge ever a Cash ISA tax?
No. HMRC’s planned 22% charge applied to interest, or the equivalent alternative finance return, paid on cash held inside a Stocks and Shares ISA or an Innovative Finance ISA, which hold investments such as shares, funds and peer-to-peer loans. Cash ISAs were never in scope. The Budget documents do not mention the charge, and press reports on 28 October 2026 say it is not going ahead as planned, so it is unconfirmed. See the planned 22% charge. With investments your capital is at risk.
What about savings outside an ISA?
Interest on savings held outside an ISA can be taxed, but only above your allowances. gov.uk lists three: your Personal Allowance, if other income has not used it up, the starting rate for savings, and the Personal Savings Allowance, which is £1,000 for a basic rate taxpayer, £500 for a higher rate taxpayer and £0 for an additional rate taxpayer.
The Budget document says tax rates on savings and property income rise by a further 2 percentage points from April 2027, on top of the 2 points announced at the Budget in November 2025. The tax overview gives the savings rates from 6 April 2027 as 24%, 44% and 49%, to be legislated in the Finance Bill 2026-27.
| Tax band | Personal Savings Allowance | Rate above it in 2026/27 | Rate from 6 April 2027 |
|---|---|---|---|
| Basic rate | £1,000 | 20% | 24% |
| Higher rate | £500 | 40% | 44% |
| Additional rate | £0 | 45% | 49% |
An illustration. This is not a forecast and is not tied to any account or rate. Take £1,500 of interest earned in a year outside an ISA by a saver whose tax band is set by their other income and who gets no starting rate for savings. The Personal Savings Allowance comes off first, and the rest is taxed at the band’s rate.
| Tax band | Interest above the allowance | Tax in 2026/27 | Tax in 2027/28 | Same interest in a Cash ISA |
|---|---|---|---|---|
| Basic rate | £500 | £100 | £120 | £0 |
| Higher rate | £1,000 | £400 | £440 | £0 |
| Additional rate | £1,500 | £675 | £735 | £0 |
The rise adds £20, £40 or £60 of tax on this £1,500, depending on the band, and nothing to a Cash ISA. So for someone who already pays tax on interest outside an ISA, the tax-free wrapper saves that much more. HM Treasury says 84% of income tax payers are unaffected by the savings and property income changes.
Which band applies depends on your total income, including the interest. See savings tax 2027 for the detail and the savings tax calculator for your own figures. Tax treatment depends on your circumstances and may change.
What does it mean for you?
This is general information, not a recommendation. What suits you depends on how much you save and what else you hold.
- You pay into Cash ISAs. The limit stays £20,000 and your interest stays tax-free.
- You hold cash inside a Stocks and Shares or Innovative Finance ISA. A planned 22% charge on its interest is unconfirmed. Ask your ISA manager what it expects to apply.
- You hold savings outside an ISA. Whether the higher rates cost you anything depends on whether your interest is above your allowances. The savings tax calculator shows the effect.
- You want to move a Stocks and Shares ISA into a Cash ISA. A planned block for under-65s is unconfirmed. See ISA transfers.
Every change is in one table in ISA changes 2027.
Questions people ask
Are Cash ISAs being taxed?
No. Interest earned inside a Cash ISA stays tax-free. The Budget on 28 October 2026 cancelled the planned £12,000 limit, so the Cash ISA limit stays £20,000. What rises is tax on savings interest outside an ISA.
Is the government taxing ISAs in 2027?
Not interest inside a Cash ISA. A planned 22% charge on interest from cash held inside Stocks and Shares and Innovative Finance ISAs is unconfirmed after the Budget, and it never applied to Cash ISAs. The higher savings tax rates of 24%, 44% and 49% apply outside ISAs only. See every ISA change after the Budget.
Will tax on savings interest outside an ISA go up?
Yes. The Budget document says rates on savings and property income rise by a further 2 percentage points from April 2027, on top of the 2 points announced in 2025. The savings rates become 24% basic, 44% higher and 49% additional. The Personal Savings Allowance and starting rate for savings are not part of that change. See savings tax 2027 and the savings tax calculator.
Is the savings tax rise certain?
It is announced in the Budget and set out in the tax overview as part of the Finance Bill 2026-27, which still has to pass Parliament. Tax rules can change before a Bill becomes law.
Does the Cash ISA limit affect the savings I already have?
No. The limit was always on new money paid in each year, and it stays £20,000. The interest on money already in Cash ISAs stays tax-free.
Sources
- 1 Budget 2026, HM Treasury (paragraphs 2.50 to 2.52) (gov.uk)
- 2 Budget 2026: Overview of tax legislation and rates (HM Treasury) (gov.uk)
- 3 Cash ISA limit reduction: tax information and impact note (HMRC, 17 September 2026) (gov.uk)
- 4 ISA reform 2027: anti-circumvention rules factsheet (published before the Budget) (gov.uk)
- 5 Changes to tax rates for property, savings and dividend income (HM Treasury, 26 November 2025) (gov.uk)
- 6 Individual Savings Accounts: how ISAs work (GOV.UK) (gov.uk)
- 7 Tax on savings interest: how much is tax free (GOV.UK) (gov.uk)