Changes announced in the 2025 Autumn Budget mean the way many people use ISAs will need to evolve, particularly for those under the age of 65. With limits on Cash ISAs being reduced, investing is likely to play a bigger role in making the most of your tax-efficient savings in the years ahead.
A fresh start for your finances in 2026 … and beyond
From 6 April 2027, savers under 65 will only be able to put £12,000 per tax year into a Cash ISA, down from the current £20,000.
The important point to note is that the overall ISA allowance remains £20,000. The difference is that if you want to use your full allowance, at least £8,000 will need to be invested using a Stocks & Shares ISA or another investment-based ISA.
For those aged 65 and over, the rules remain unchanged and the full £20,000 Cash ISA allowance continues to apply.
While the changes are still ahead, January is the perfect time to plan early, rather than rushing to adapt later.
Why the new year is the right time to think about investing
It’s when people reassess priorities, set financial resolutions and think about where they want to be in the future. With the new ISA rules on the horizon, it’s also an opportunity to ask an important question: is your money working hard enough for you?
For many savers, the answer lies in understanding the difference between saving, investing – and how ISAs can be used more effectively.
Cash savings vs investing: understanding the shift
Cash ISAs
Cash ISAs remain useful, particularly for:
- emergency funds
- short-term savings
- money you may need in the near future
They are low risk and easy to understand, but returns can be limited, especially once inflation is considered. With the Cash ISA allowance reduced to £12,000 for under-65s, relying solely on cash may no longer be enough to maximise tax-free savings.
Stocks & Shares ISAs
A Stocks & Shares ISA allows you to invest your money rather than simply hold it as cash. While investments can rise and fall in value, they offer the potential for higher returns over the long term.
Key benefits include:
- tax-free growth and income
- potential to outpace inflation over time
- flexibility to suit different goals and risk levels
You don’t need to be a seasoned investor to use a Stocks & Shares ISA – many options are designed to be straightforward and professionally managed.
New year, new strategy
As you set financial goals for the year ahead, it’s worth considering what investing can help your money achieve.
- Protecting your money from inflation
Inflation reduces the spending power of cash over time. Long-term investing has historically offered better protection against this erosion. - Making the most of your ISA allowance
Do you rely heavily on Cash ISAs? If so, the upcoming changes may require a new approach. With tighter limits on cash, investing becomes the prime way to fully use your £20,000 annual ISA allowance going forward. - Time works in your favour
The earlier you invest, the longer your money has to grow. January is an ideal starting point, giving investments the maximum time to benefit from long-term growth and compounding. - A strategy that evolves with you
Short-term goals may still suit cash, while long-term goals are often better supported by investing. Investments can be adjusted over time as your goals, income and circumstances change. - Consider a blended approach
Many people benefit from a mix of cash savings and investments, balancing security with growth potential.
What ISA changes mean for savers under 65
For younger savers, the 2025 Autumn Budget changes marked a clear shift – investing is likely to become an essential part of long-term financial planning rather than an optional extra.
While investing can feel unfamiliar at first, it doesn’t have to be complicated. With the right advice and a long-term mindset, it can be a powerful way to grow wealth and make the most of your tax-efficient allowances. And we’re here to help you understand investing.
Speak to your adviser this January
If the new year has prompted you to review your finances, or you’re unsure how the upcoming ISA changes could affect your plans, Insight Financial Associates are here to help.
We hope you already know that our independent financial advisers provide clear, personalised guidance to help you make confident decisions about saving and investing. So why not get in touch today to book a review appointment?