ISA Limits and Tax Changes: What’s Different After the Budget?

As the dust settles around the Chancellor’s recent budget, we’re seeing opportunities arise for ISA investors who look carefully at the details in the new plan:

Less cash, more shares
The most obvious of these is the new limit on cash ISAs. Each year, everyone can still put up to £20,000 worth (of cash, shares, bonds etc) into the tax-free protection of an ISA but, from April 6^th 2027, anyone under 65 will only be able to invest £12,000 of this allowance in cash.

This means two things: One, to make the most of your full ISA allowance, it makes sense to look at stocks and shares ISAs like the CT ISA range. The last thing any saver or investor wants to do is leave a tax-free opportunity on the table.

Two, we think this new rule could lead to more savers turning to investing, bringing greater in-flows to the stock market. And just because many of us are limited to £12,000 in cash, it doesn’t mean we should only invest £8,000 in stocks and shares ISAs. How much you invest in the potential of the stock market is up to you – provided you don’t exceed the 20K limit for ISAs.

Time to beat inflation
Choosing how much you put into stocks and shares versus cash is dependent on your timeframe. If you’re just looking to park money somewhere safe for a shorter period, then a cash ISA is an option. But if you’re investing for about five years or longer, and you’re hoping for higher returns – that can keep your nest egg growing above inflation – then stocks and shares ISAs like the CT ISA range could suit your goals better, the investment options all have long term focusses, rather than just short-term returns. Particularly when you consider good cash ISAs are offering around 4.5% interest*, and the current inflation rate in the UK is 3.8%**.

Tax-free looks ever more attractive
The next thing to consider is the unavoidable one: tax. The new budget has frozen income tax thresholds until 2031 which means anyone getting a pay rise or any organic growth in salary between now and then might find themselves wandering into a higher tax bracket.

Plus, capital gains tax paid on interest is going up. From April 2027 the tax you’ll pay on interest earned from savings over your personal allowance will increase to 22% for basic-rate payers, 42% for higher-rate taxpayers and 47% for additional rate taxpayers.

The net-net of these new tax increases is clear – it’s now more important than ever to make smart choices with how you shield your money within the new tax-free ISA allowances.

Getting started is easy
The CT ISA range makes it easy to use the stock market to save for important life goals. We’ve designed our ISAs to work around your objective – income, capital growth or a mix of both – and your personal goals such as saving for retirement, a down payment on a house, or putting money away for children to use later. You can begin investing with as little as £2,000 in our CT ISA and CT LISA, or from £1,000 in our Junior ISA. There are no online dealing charges. There is just one low, flat fee, no matter how much you invest.

This is something you can do today – take a look at the CT ISA range to see which one could help you reach your savings goal.

And if you’ve already got an ISA which you’d like to roll into one of ours, that’s easy too. Just fill out a transfer form and we’ll take care of the rest.

*Independent.co.uk, December 2^nd 2025, ‘December’s best savings accounts’

**Office For National Statistics, CPIH annual rate, November 15^th 2025