By amount saved
£20,000 in savings: one year of ISA allowance, and what changes in 2027
The calculator is set to £20,000 at 4 % with £45,000 of other income. It compares a taxable account with a cash ISA in both tax years; change any figure to match your case.
A cash ISA saves you, from April 2027
£0a year
£0 in 2026/27 · interest £800 a year
| 2026/27 / 2027/28 | |
|---|---|
| Your allowance on savings | £1,000 / £1,000 |
| Interest at 0 % (allowances) | £800 / £800 |
| Tax in a taxable account | £0.00 / £0.00 |
| Tax in the cash ISA | £0.00 / £0.00 |
| Interest you keep, taxable account | £800 / £800 |
Line by line, 2027/28
| Interest at 0 % (allowances) | £800 |
| Tax in a taxable account | £0.00 |
| Tax in the cash ISA | £0.00 |
From 6 April 2027 you can pay at most £12,000 a year into cash ISAs if you are 64 or under on 5 April 2028; money already inside stays tax free.
£20,000 is exactly one year's ISA allowance, and in 2026/27 the whole sum can go into cash ISAs, split between several accounts if wanted (GOV.UK, how ISAs work). From 6 April 2027 the overall allowance stays at £20,000, but the Individual Savings Account (Amendment) (No. 2) Regulations 2026 cap cash ISA payments at £12,000 a year for anyone aged 64 or under at the end of the tax year. A saver under 65 with £20,000 of new cash therefore has £8,000 that cannot go into a cash ISA that year. At 4 %, that £8,000 earns £320. On £45,000 of income the tax on it is £0.00, because the £1,000 Personal Savings Allowance covers it. On £55,000, a higher rate taxpayer with a £500 allowance, it is £0.00. Savers who are 65 or over by 5 April keep the full £20,000 cash limit.
Sums checked by Radif Partners · Editorial policy · How the sums are done
Three ways the same £20,000 is treated
The table follows a single deposit of £20,000 of new cash, with as much as possible placed in a cash ISA and the rest left in a taxable account at the same 4 %. It shows what stays taxable and what that costs at three incomes. The only thing that changes between the rows is the cash ISA limit, which depends on the tax year and on age at its end.
| Year and age | Into cash ISAs | Left taxable | Interest on it | Tax, £45,000 | Tax, £55,000 | Tax, £130,000 |
|---|---|---|---|---|---|---|
| 2026/27, any age | £20,000 | £0 | £0 | £0.00 | £0.00 | £0.00 |
| 2027/28, 64 or under on 5 April | £12,000 | £8,000 | £320 | £0.00 | £0.00 | £150.40 |
| 2027/28, 65 or over on 5 April | £20,000 | £0 | £0 | £0.00 | £0.00 | £0.00 |
For the £45,000 earner, the new limit costs nothing at this rate: the £320 of interest on the uncovered part is inside the allowance. The £55,000 earner pays a small sum, and the additional rate taxpayer pays 47 % on every pound. Without any ISA, the same higher rate taxpayer would pay £126.00 on the full £800 in 2027/28.
What the regulations actually say
The cap comes from SI 2026/1018, made on 10 September 2026 and in force from 6 April 2027. It limits subscriptions to cash ISAs to £12,000 in a tax year for someone who is 64 or under at the end of that year. It does not touch money already saved: a cash ISA filled in 2026/27 keeps paying tax-free interest. It also leaves the overall £20,000 unchanged, and the Lifetime ISA keeps its £4,000 inside that total. The cash ISA limit page has a tool to test a date of birth.
The timing of a £20,000 deposit
Because the limit is per tax year, the date of payment matters more than the amount. £20,000 paid into cash ISAs on or before 5 April 2027 is fully sheltered under the current rules. The same sum paid on or after 6 April 2027 by someone under 65 is split: £12,000 in cash and £8,000 either elsewhere in the ISA family or outside it. Withdrawing and paying back in is a separate question: only a flexible ISA lets money taken out be replaced in the same tax year without using fresh allowance.
Interest is counted for tax in the year it is paid, so the interest of a taxable account is compared with the allowance of that year (GOV.UK, tax-free interest). The calculator above shows both tax years side by side for your own figures. For the rules on investment ISAs holding cash, see the page on cash in a stocks and shares ISA, and for a larger balance the £50,000 page.