MoneyCash ISAFrom April 2027, the amount you can tuck away in a cash ISA tax-free is being slashed from £20,000 a year to just £12,000 if you're under 6507:08, 25 Jul 2026UK savers are currently on an £8,000 countdown that could cause them to lose a huge chunk of tax-free cash. But don’t worry: I will explain everything that you need to be aware of.‌What’s happening?From April 2027, the amount you can tuck away in a cash ISA , completely tax-free, is being slashed from £20,000 a year to just £12,000 if you're under 65.‌That's £8,000 of your own tax-free allowance, gone. Vanished. Reallocated to a government scheme that would very much prefer you put your money into the stock market instead.‌You've got this tax year (2026/27) and this tax year only before the cap drops. The news was announced in last year's Budget by then-Chancellor Rachel Reeves.She said: "Someone who’s invested £1,000 a year in an average stocks and shares ISA every year since 1999 would be £50,000 better off today than if they’d put the same money into a cash ISA.‌"And so from April 2027, I will reform our ISA system… keeping the full £20,000 allowance while designating £8,000 of it exclusively for investment… with over 65s retaining the full cash allowance."The hidden cost of keeping cash on the sideIf you're the sort who likes to keep a bit of cash sitting inside your stocks and shares ISA - say, between selling one investment and deciding what to do next- you're about to get taxed on the interest that cash earns. You will be charged a flat 22% charge, known as an "anti-circumvention rule".Know the difference between your ISA typesA cash ISA and a stocks and shares ISA are not interchangeable, and from 2027 they'll be taxed completely differently if you're holding cash.Article continues belowIf you're not sure which is which, that's exactly the confusion this system is built to profit from. Sort it now.If you're 65 or over, you can breathe!Your £20,000 cash ISA allowance stays put. This one's aimed squarely at younger savers being nudged, quite firmly, towards the stock market.Choose Daily Mirror as a 'Preferred Source' on Google News for quick access to the news you value.‌TaxStock marketCash ISAISAs