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Find out more'Am I old enough to avoid the new cash Isa limit?'
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Michael covers consumer finance matters such as scams, pensions, savings and investments. He enjoys breaking through the excess jargon and simplifying personal finance.
I’ve been looking to open a new Isa for the current tax year and I’m conscious of the changes that are being made to Isas in 2027, targeting those under 65.
I turn 65 in June 2027, so how will I be affected?
Mr Taylor, Surrey
'You'll avoid the new rules, but only just'
Michael Tomlinson, Which? money expert, says…
Due to a quirk of the tax system, the big changes to cash Isas won't affect you.
Although you’ll be 64 in April 2027 when the rules change, the fact that you’ll then be 65 during the 2027-28 tax year means HMRC treats you as being 65 for the whole tax year. So, you can continue to pay up to £20,000 a year into a cash Isa.
To recap, from 6 April 2027, although the overall Isa allowance will remain at £20,000 per person per tax year, under-65s will only be able to add £12,000 of that to a cash Isa.
The rest can go in a stocks and shares Isa, lifetime Isa or innovative finance Isa (or the discontinued Help to Buy Isa, if you still have one).
The fact that you’ll then be 65 during the 2027-28 tax year means HMRC treats you as being 65 for the whole tax year
The government is consulting on ways to stop savers bypassing the rules by saving cash in stocks and shares Isas.
These include banning transfers from stocks and shares Isas to cash Isas for under-65s and, for savers of all ages, charging 22% tax on interest earned on cash in stocks and shares Isas.
Alternatively, savers could turn to non-Isa savings accounts, where they will still be shielded from tax to some extent by the personal savings allowance. This lets basic-rate taxpayers earn savings interest of up to £1,000 a year tax-free, and higher-rate taxpayers £500.
Based on an interest rate of 4.5% (near the top of what instant-access accounts currently offer), a higher-rate taxpayer could save up to £8,000 and not pay any tax on the interest.
- Find out more: Best cash Isas
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