Those with savings accounts have been advised to take action without delay
People have been encouraged to maximise their savings limits(Photo: Getty)
Depositors are being urged to make the most of their tax-free savings caps before major reforms take effect. One financial institution has recommended individuals act quickly to secure the most favourable outcomes for their savings.
Executives at Nottingham Building Society have appealed to savers to utilise their full £20,000 ISA limit ahead of alterations to tax-free accounts. The Treasury outlined in the Autumn Statement 2025 that the yearly allowance would be reduced. Currently, depositors can invest up to £20,000 annually, dividing this between investment ISAs and cash ISAs as they prefer. However, from April 2027, savers will only be able to contribute up to £12,000 each year according to their preference, with the remaining £8,000 restricted to investment-focused accounts exclusively. There is, however, a notable exception. Individuals aged 65 and over will not be subject to the new arrangements and will maintain the current allowance.
The building society has encouraged savers to seize this last opportunity to deposit the complete £20,000 into cash ISAs. Harriet Guevara, chief savings officer at Nottingham Building Society, noted that this year’s ISA period carries heightened significance, as it represents the second-to-last chance to fully benefit from the £20,000 tax-free cash ISA limit before it reduces to £12,000 in April 2027 for those under 65.
The building society has also advised savers to make their moves well ahead of schedule, rather than postponing contributions until the tax year draws to a close. The present fiscal year ends on April 5, with updated allowances commencing from April 6.
Ms Guevara explained that the institution understands numerous individuals will be seeking to add to or establish new products. She noted that based on trends observed annually, many savers opt to act sooner to circumvent seasonal congestion. She warned that delaying until just before the deadline creates the possibility of encountering technical or processing issues and may result in insufficient time to select the product most suitable for their situation. Further modifications to savings regulations are planned for April 2027, when ISA allowances will be revised.
The tax percentages applied to taxable savings will increase, with each band rising by two percentage points. This translates to basic rate payers seeing their percentage move from 20 per cent to 22 per cent, while higher rate payers will experience an escalation from 40 per cent to 42 per cent.
Additional rate payers will confront an increase from 45 per cent to 47 per cent. While decreasing the cash ISA limit is intended to steer savers toward greater investment activity, Ms Guevara expressed doubt that this policy adjustment will deliver the desired outcome.
She stated that the building society backs the Government’s objective of increasing investment participation, but merely reducing the cash limit will not accomplish this. She emphasised that improved financial literacy is essential, enabling individuals to save or invest in a manner aligned with their objectives and comfort with risk.