Autumn Budget: Cash ISA limit cut to £12,000 a year

swayzak

So does this mean of my 20k allowance 12k can be in cash isa & 8k in stocks & shares?

Or is the stocks & shares ISA separate eg allowing 12k in cash isa & 20k in stock+shares isa (so 32k in total)?

Kim_13

swayzak said:

So does this mean of my 20k allowance 12k can be in cash isa & 8k in stocks & shares?

Or is the stocks & shares ISA separate eg allowing 12k in cash isa & 20k in stock+shares isa (so 32k in total)?

The former. It was clearly stated in the budget that the total ISA limit will remain £20,000 for all.

Aretnap

Ceejay3000 said:

A quick Google will show you that in 1999/00 there was also a split limit: £7000 Stocks and Shares, with a £3000 Cash ISA limit. So this is not a completely new arrangement.

I imagine that you'll be able to transfer to a cash ISA the next year, unless they start trying something complicated like getting Stocks & Shares ISA providers to track how much of the money you had put in over time was over the cash limit each year, and only letting you transfer that excess to another Stocks & Shares ISA or to a non-ISA account.

Andf we need to keep telling ourselves that this only starts in 2027/28. We have the rest of this tax year, and next tax year, with no change to ISA limits or the non-ISA savings tax rates. By this time next year we may have more of an idea as to how it will work.

It's not new at all. The separate cash ISA limit lasted until 2014. There were separate ISA limits for longer than there has been a single one.

There were also measures to prevent some of the clever workaround that have been mentioned. IIRC

(1) Money could not be transferred from a S&S ISA to a cash ISA, though it could be transferred in the other direction,
(2) Interest could be paid on a cash balance within a S&S ISA, however it was taxable as if it were a normal bank account, and
(3) Very low risk investments such as money market funds, short dates gilts or funds which contained mainly shirt dated gilts, could not be biught within a S&S ISA

All of those measures feel like they would be fairly easy to reintroduce.

happybagger

and if they did they'd need to do something with (1) for those "of later years" who were looking to lower their risk appetite, I'd suggest

elephantie25

Hi!
Is the £12k Cash ISA limit inclusive of the £4k Lifetime ISA (Cash)? 

Or can I save £4k in my LISA (Cash) and £12k in my Cash ISA from April 2027? I assume not.
thanks!

Alexland

elephantie25 said:

Is the £12k Cash ISA limit inclusive of the £4k Lifetime ISA (Cash)? 

Or can I save £4k in my LISA (Cash) and £12k in my Cash ISA from April 2027? I assume not.
thanks!

My reading is that you should should be able to contribute £12k+£4k into both a Cash ISA and cash LISA.

Although I wouldn't be confident that the government will still be offering LISA bonuses (or even allowing new contributions) in 2027 given their announced replacement product for first time buyers.

intalex

I think the new limit of £12k was phrased "ISA cash" rather than "cash ISA", which I perceive to imply that any cash put into a LISA is counted as using the limit rather than separate... I'm sure time will clarify...

Alexland

intalex said:

I think the new limit of £12k was phrased "ISA cash" rather than "cash ISA", which I perceive to imply that any cash put into a LISA is counted as using the limit rather than separate... I'm sure time will clarify...

My reading of the full budget PDF quoted below is that the limit will not apply to cash in Lifetime ISAs but yes I accept it could be read either way. If it was 'cash put in' to ISAs then that would limit S&S ISAs too as people need to contribute cash into the ISA before buying the S&S investments (unless they transfer-in a qualifying employee share buying scheme) so I am fairly sure they just mean to limit Cash ISAs.

"4.228 ISA Reform – From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000. Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031. Savers over the age of 65 will continue to be able to save up to £20,000 in a cash ISA each year. In addition, financial services firms will be providing new, easily navigable ways for people to find the right UK investment for them"

Slightly worrying that they are talking about 2031 as the end date for how long these annual allowances are approved to be available. Appreciate that's the end of the budgeting period but it might be them preparing the ground to start saying they never promised these allowances would run beyond 2031 if they look to reduce them in future to feed the doom loop.

It will be interesting to see what form the replacement LISA for home buyers will take - last time with the HTB ISA it was a type of Cash ISA.

"4.230 Lifetime ISA Reform – The government will publish a consultation in early 2026 on the implementation of a new, simpler ISA product to support first time buyers to buy a home. Once available, this new product will be offered in place of the Lifetime ISA."