Cash ISA confusion: savers blindsided by changes to ISA rules

• Less than half of savers correctly identified the new £12,000 Cash ISA limit for under-65s due in April 2027
• Almost three-quarters understand current rules, but just over half are aware of the major changes coming into effect
• Nearly half of UK savers believe the reduced limit penalises those seeking the safety of cash over stock market risk
• Over half of savers would invest excess funds in stocks and shares, however current market volatility remains a concern for some

New research from Atom bank has revealed a significant knowledge gap and public frustration as the UK prepares for the most radical shake-up of ISA rules in a generation.

From next year, while the overall ISA allowance will remain at £20,000, the annual limit for Cash ISAs will drop to £12,000 for anyone under 65. The government’s intention is to encourage the remaining £8,000 to be invested in stocks and shares or other permitted ISAs to help savers potentially achieve better long-term returns and boost the economy. Despite the impact of this shift, it is a change that less than half of savers (43%) were able to identify correctly. With this being the final year of the current ISA rules, the study shows that while savers are largely comfortable with the status quo (71% know the current rules), they are perhaps unprepared for the incoming reforms.

The findings mirror a previous Atom study, which last year found that the majority of savers (59%) believed that government reforms would make ISAs increasingly difficult to navigate. This latest data suggests that sentiment is turning into a sense of unfairness among some; nearly half of savers (48%) view the reduced limit as a penalty on risk-averse individuals, while two fifths (41%) believe that rules should be uniform for everyone.

Just over a fifth (22%) viewed the upcoming age split as a fair way to encourage younger people toward long-term investing, with a third instead suggesting it penalises younger savers who prefer the safety of cash.

Market volatility continues to impact confidence

The confusion is compounded by a nervous market. Despite the lower cash limit for under 65’s, well over a third of savers (39%) reported that they are now less inclined to move excess money from cash to Stocks & Shares ISAs due to recent market volatility.

The findings do suggest that there is some hope that the rules may encourage some savers to turn to investing. Over half (55%) indicated they would invest excess allowance into a Stocks & Shares ISA, while over a third (36%) said they would instead move it to a taxable savings account. A significant portion (21%) admitted to being uncertain about how to proceed with investing and would need professional advice. This suggests appetite to invest is perhaps there, but the need for wider education around investing is needed to encourage more funds to flow into stocks and shares.

Savings expert and Chief Commercial Officer at Atom bank, Chris Storey, said:

“Our research shows a potentially worrying disconnect between policy intent and public understanding. While the goal of encouraging long-term investing is positive, a significant number of people clearly value the safety and certainty of cash, especially in a volatile global climate. Forcing a lower limit on these savers before they feel ready to embrace the stock market risks leaving millions in a state of financial limbo.

“While there is some appetite among under 65’s to shift funds into stocks and shares, it is clear that these changes will take considerable time to bed in. There is a big requirement for education to drive home both the benefits and the risks of investing, particularly when the market is so up and down. In the meantime, with the lower limit looming, it has never been more important for savers to review their options and make the most of their current allowances.”

For those looking for a simple, secure way to make the most of their cash ISA allowance before the rules change, the Atom Easy Access Cash ISA lets savers deposit up to £20,000 and earn 4.25% AER / 4.17% tax-free (variable)*.

ENDS

*AER’ stands for Annual Equivalent Rate. This shows you what the rate would be if interest were paid and compounded each year. The rate is variable so may go up or down. Tax free means you won’t pay UK Income Tax on the interest you earn from this account. ISA rules, T&Cs and eligibility apply. Must be 18+ and a UK resident.

How it works

• Annual allowance: You can deposit up to your full £20,000 ISA allowance this tax year.
• Management: Open and manage your ISA through the Atom bank app.
• Flexibility: This is not a flexible ISA. This means if you make a withdrawal, you cannot replace that money without using more of your current year’s ISA allowance.
• Transfers in: We currently do not accept transfers in from other ISA providers. You can, however, transfer the full balance from your Atom Cash ISA to another provider at any time.

Data Period: Research conducted in April 2026 with a nationally representative sample of 1,000 UK adults.

About Atom bank

For Atom Jen Shepherd, jen.shepherd@atombank.co.uk

Atom bank is the UK’s highest rated bank on Trustpilot*, and is on a mission to make the experience of borrowing and saving faster, simpler and better value than anyone else. The bank launched operations in April 2016 as the UK’s first app-based bank, and offers award-winning mortgages and savings through its app, alongside secured business lending for small and medium-sized enterprises.

Based in the North East of England with a team of nearly 600 people, Atom is here to ​​change banking for the good, for the better, and for everyone. This means focusing on customers’ needs, delivering better value than the incumbents, providing an exceptional app-based experience and offering award-winning customer support via phone, chat, email and social channels. The bank has some of the best customer service credentials in the UK, having achieved 5-star ratings on both the iOS and Android App Stores, whilst consistently delivering Net Promoter Scores (NPS) in the high 80s.

Based in Newcastle, Atom is an engaged and active member of the North East Community. In 2022 Atom signed a five-year Memorandum of Understanding with Durham University to progress key research and diversity initiatives. The region has one of the highest levels of youth unemployment in the UK and Atom is passionate about addressing the critical digital skills gap and helping develop young people and other groups that are under-represented within the industry. In 2024, Atom purchased 25 acres of newly planted broadleaf woodland in Northumberland to sequester 7000 tonnes of carbon, which will account for all its operational emissions since founding. This forms part of the bank’s pledge to be climate positive by 2035, becoming the first UK bank to make this commitment.

As of November 2021, all employees enjoy a four-day working week, after Atom became the largest company - and only bank - in Britain to introduce the policy for all employees, with no reduction in salary.

The Atom executive team are highly experienced, having built and run some of the most well-respected banks in the UK. CEO Mark Mullen has 30 years’ experience in the sector and was previously CEO at the multi- award-winning telephone and internet bank first direct. The team is supported by a strong non-exec board, chaired by Lee Rochford.

*Based on 19,484 reviews, as of 04/05/2026.