Cash ISA limits are being changed but not until April 2027 (Image: Getty)
State pensioners can deposit a huge £60,000 into their Cash ISAs completely tax-free between now and April 6, 2027 following new rules put in place.
Cash ISA limits are set to be slashed from their current £20,000 limit to just £12,000 per year under new rules. But the new restriction, set to be put into effect from April 6, 2027, will not apply to over-65s.
It means that all state pensioners, and some aged 65 and over who haven’t yet hit state pension age, which is in the process of rising from 66 to 67 from next month, will not be bound by the restrictions.
This is a change campaigners like Martin Lewis were pushing for, so that older people are not forced to put money in Stocks and Shares ISAs during retirement, when they should be accessing money rather than putting it away in longer-term funds.
Chancellor Rachel Reeves changed Cash ISA rules so that from next year, savers aged under 65 won’t be able to deposit more than £12,000 of tax-free cash.
The £20,000 overall limit will still be in place, but savers will be forced to keep at least £8,000 of the money in a Stocks and Shares ISA instead, in a bid to boost investing. For older investers aged over 65, an exemption is in place so that pensioners don’t need to put money away in shares.
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Because of the way the deposit rules work, it means over 65s could add £60,000 to a Cash ISA between April 5, 2026 and April 6, 2027 fully legally, a span of just 366 days.
That’s because the deposit limits for Cash ISAs follow tax years, which reset every year on April 6. It means pensioners could max out their deposit limit now (if they’ve not already put money in an ISA for this year), max out the next one in April, then max out the next one the following April on or after April 6, putting £60,000 away between now and the end of April 2027.
- Now, before April 6, 2026: Add up to £20,000 to Cash ISA.
- Between April 6, 2026 and April 6, 2027: Add another £20,000 Cash ISA
- From April 6, 2027: Add another £20,000 Cash ISA
Taken together, it’s a maximum £60,000 of deposits for over 65s.
Reacting to the changes, Martin Lewis said via MSE: “There’s logic in here based on the policy aims. While I would’ve preferred a carrot, not stick approach – this isn’t as bad as it could’ve been, £12,000 per year is still a reasonable whack for many people.
“The stated aim was not to raise revenue, but to encourage young people to invest rather than save – both for the economy, but also because on average it outperforms.
“When I met the Chancellor on this a few weeks ago, I pointed out that a blanket cut to the limit would be perverse; to cut cash ISA limits for older people to encourage younger people to invest wouldn’t work.
“So, the carve out for over-64s makes total sense and I’m pleased she listened.
“What needs to happen along with this is better investment education, easier access to guidance, and better investment incentives for young people.”
