This Time Next Year

This time next year, Rodney, we'll be millionaires. This time next year, the cash ISA allowance will be £8,000 smaller. Del Boy never planned for that one.

In April 2027, the government will cut the annual cash ISA allowance from £20,000 to £12,000 for anyone under the age of 65.

That is not a rumour, a consultation proposal, or a Budget footnote that might quietly disappear. It was confirmed in the October 2024 Budget. It is happening.

Which means the tax year we are in right now 2026/27, running until 5 April 2027, is the last one in which every adult under 65 can shelter a full £20,000 in cash, tax-free, in a single year.

This time next year, that window will have closed.

Only Fools and Horses

Del Boy's entire philosophy rested on one idea: the deal in front of you is always better than the deal you wait for.

Right now, the deal in front of you is a £20,000 annual cash ISA allowance. Tax-free interest, permanently sheltered, no questions asked. It has sat at £20,000 since 2017. Most people have quietly taken it for granted.

From 6 April 2027, that deal changes. For anyone under 65, the cash ISA allowance drops to £12,000. The remaining £8,000 of annual ISA allowance will still exist but it must go into a stocks and shares ISA, a lifetime ISA, or an innovative finance ISA. Not cash.

The recommendation here is straightforward: if you have unused cash ISA allowance for 2026/27, use it before 5 April 2027. Money sheltered now stays sheltered permanently, regardless of what the rules look like next year. The window is open. It will not always be.

He Who Dares

The government's stated rationale for the cut is to encourage more money into UK equities, to get savings working harder, supporting British businesses, generating better long-term returns for savers.

It is an ambition I have some sympathy with in principle.

In practice, it is the government deciding that cautious savers are making the wrong choice and legislating accordingly. Rather than making investment more attractive, it has chosen to make cash saving less convenient. He who dares, apparently, legislates.

There is an important distinction worth making here. The overall ISA allowance- £20,000 is not being cut. Only the cash portion is restricted. From April 2027, under-65s can still put £20,000 a year into ISAs. But £8,000 of that must go into risk assets, whether that suits their circumstances or not.

If your circumstances suit a stocks and shares ISA then, longer time horizon, existing emergency fund, comfortable with market volatility, then the change may not trouble you greatly. If they do not, the change is more significant than the headline suggests. Worth reviewing which ISA types you are currently using and whether the post-2027 rules change the balance of where new money should go.

Lovely Jubbly

There has been a tendency in recent years to present cash ISAs as a slightly embarrassing national habit. Billions sitting in low-interest accounts when it could be growing in the stock market. Opportunity wasted. Returns left on the table.

I am not keen on that framing.

Cash serves a purpose that investments cannot. Emergency funds belong in cash — money you might need next month has no business riding the volatility of global equity markets. Short-term savings goals belong in cash. For additional rate taxpayers, who receive no personal savings allowance at all, a cash ISA shelters every pound of interest from the day it arrives. That is not a bad habit. That is sensible planning.

The assumption behind the cut is that people holding cash are doing so instead of investing. In my experience, most people hold cash alongside investments — for different purposes, over different time horizons. The two are not in competition.

A cash ISA, used properly, is lovely jubbly. The recommendation is not to abandon it — it is to make the most of the current allowance while it remains at its most generous, and to think carefully about how cash and investment ISAs sit alongside each other in the years ahead.

The Trotter Inheritance

Worth flagging, because it is easy to miss: this change does not land equally across the generations.

Over-65s — broadly, the Baby Boomer generation, keep the full £20,000 cash ISA allowance. The logic is reasonable: older savers are drawing down rather than accumulating, they need accessible cash, and volatility is a greater risk at that stage of life. I do not disagree with that logic.

But it does create an uneven picture. The generation that bought property before prices became what they are, that benefited from final salary pensions, that retired before the rules started shifting, keeps the full shelter. The generation still saving for a first home, still building an emergency fund, still trying to establish financial foundations, gets less.

Gen X, Millennials, Gen Z: from April 2027, £8,000 of your annual ISA allowance must go into risk assets, by government decree, regardless of your circumstances.

The Trotters spent a lifetime trying to get their hands on an inheritance that kept slipping away. Younger savers are being handed a smaller allowance and told to take more risk with it. For families thinking about this intergenerationally — parents and grandparents who can contribute to a child's or grandchild's Junior ISA, for instance — now is a good time to review whether those structures are being used as effectively as they could be. The Junior ISA allowance remains at £9,000 for 2026/27 and is entirely separate from the adult allowance.

This Time Next Year

The practical message is simple, even if the politics behind it are not.

This tax year is the last in which anyone under 65 can contribute a full £20,000 to a cash ISA. Every pound sheltered before 5 April 2027 stays sheltered permanently. The cut applies only to new contributions from April 2027 onwards — it does not reach back into money already inside the wrapper.

Building the ISA base now, at the higher limit, costs nothing extra. It simply uses the window while it is still open.

For those unsure whether a cash ISA, a stocks and shares ISA, or a combination of both makes most sense, is exactly the conversation worth having before the deadline arrives. The rules are changing. The time to plan around them is before they do, not after.

Del Boy's problem was never the plan. It was always the timing.

He had the vision. He had the enthusiasm. What he consistently lacked was the discipline to act before the moment passed, and so the deal that was going to make everything right always seemed to land just out of reach.

This time next year, the full £20,000 will be gone for the under-65s.

Don't be Rodney.