In case you missed the headlines: 2026/27 is the last tax year when the annual tax-free Cash ISA allowance remains at £20,000 for everyone. From 6 April 2027, this allowance will be cut to £12,000 for those under 65.
How can you make the most of your tax-free allowance ahead of the change? And what does it all mean?
What is an ISA?
An ISA is a type of account that offers a tax-efficient way to save or invest. Why? Because the interest you earn from an ISA isn’t taxed.
The amount of interest you can earn depends on the ISA you choose – and whether it has a set interest rate. Starling’s Cash ISA* has an interest rate of 2.50% AER (2.46% tax-free) variable. Interest is calculated daily and paid monthly – so your interest will compound throughout the year.
Most Stocks and Shares ISAs don’t have a set interest rate – but any returns you make will be tax-free. These returns depend on investment performance and you may get back less than what you put in (capital is at risk).
Starling doesn’t offer Stocks and Shares ISAs, but many other providers do.
What’s the annual ISA allowance?
In the UK, everyone receives a tax-free ISA allowance at the start of the financial year on 6 April. For 2025/26 and 2026/27, this tax-free allowance is set at £20,000.
At the moment, you can use this allowance for one ISA, or split it between different types of ISA. You could add £15,000 to a Cash ISA and £5,000 to a Stocks and Shares ISA.
How are ISAs changing next year?
If you’re 65 or older, there will be no change – you’ll still be able to contribute up to £20,000 to a Cash ISA each financial year.
If you’re 64 or under, your annual Cash ISA limit for 2027/28 onwards will change to £12,000.
Tax yearCash ISA allowance – under 65sCash ISA allowance – over 65s2026/27£20,000£20,0002027/28£12,000£20,000
Remember: these ISA changes only apply from 6 April 2027 – for new Cash ISA contributions. So if you’ve already got £20,000 stashed away, you don’t need to redistribute your money or worry about the new lower threshold.
It’s also worth noting that these changes only apply to Cash ISAs – the annual tax-free allowance for Stocks and Shares ISAs is set to remain at £20,000, regardless of age.
As for splitting your allowance across more than one ISA? If you’re over 65, you can carry on as before. But if you’re under 65, you may need to rethink your split: £12,000 in a Cash ISA, £8,000 in a Stocks and Shares ISA. Or put everything in a Stocks and Shares ISA and max out your allowance that way.
The overall ISA contribution limit will remain at £20,000 for everyone.
How do you pay into an ISA?
There are lots of ways to pay into an ISA. Once it’s open, you can transfer a lump sum or make weekly or monthly top-ups.
You can also transfer money from one Cash ISA to another. If you want to transfer into a Starling Cash ISA, you’ll need to make sure that your provider is part of the Pay.UK transfer scheme.
