Cash ISA holders could be hit with a sizeable tax charge if planned allowance cuts go ahead, according to financial analysts. From 6 April 2027, the annual cash ISA limit for under-65s is set to fall from £20,000 to £12,000. AJ Bell’s director of personal finance, Laura Suter, said the move would likely increase the amount of tax savers pay overall. She argued that while ministers hope the change will push more people towards investing, many are instead likely to keep their money in ordinary savings accounts, where interest can be taxed.
Research by AJ Bell suggests that 51% of cash ISA savers would transfer the excess into taxable accounts if the lower limit is introduced. Suter warned that over time this could leave many people facing a substantial tax bill, with some potentially paying as much as £9,439.
