These changes are quite broad ranging, and have the potential to impact retirement planning, estate management and long-term savings strategies. Yet many people may be either unaware or do not fully understand the implications.
To check awareness of these RBC Brewin Dolphin conducted two surveys across UK adults and ISA holders in March, which revealed a significant disconnect between awareness and action around the fast-approaching ISA reforms.
The numbers tell the story. Half of UK savers remain completely unaware of the changes. 90% have made no plans to adjust their overall savings and retirement strategy, and only 6% have sought financial advice.
Currently, savers can allocate the full £20,000 ISA allowance to a cash ISA. From the 2027/28 tax year, under-65s are limited to £12,000 in cash ISAs, with the remaining £8,000 required to go into stocks and shares ISAs or other qualifying ISA types.
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Yet, when asked if they were more likely to maximise their allowances before changes come into effect, over 40% of ISA holders said they would not, with a further 11% saying they would not contribute at all in 2026.
This reduction to the cash ISA tax-free allowance represents a significant shift in the UK savings and investment landscape. For those in that critical window before retirement, these upcoming changes are an opportunity to reassess and reset your savings strategy, prioritising allowances whilst you’re still able to do so.
For those in early to mid-career, developing a long-term retirement saving and investment habit lays the groundwork for funds to accumulate steadily. ISAs remain an excellent vehicle for retirement at all career stages, but it is important to think about how this change may impact the way that you allocate your savings within the allowances based on your specific financial goals.
But it is not just ISA allowances changing next year, from April 6 2027, unused pension pots will be included within the estate for inheritance tax purposes. This represents an important change that could reshape retirement and estate planning strategies for many families.
These changes, combined with the freezing of nil-rate bands until 2031, mean more people will be caught in the inheritance tax net for the first time. In addition, this change may alter how people view their pensions. Many are now considering whether they should be extracting funds and putting this money to work in their lifetimes. Whether that be spending it in retirement, gifting to family members sooner or funding a policy that would provide liquidity to pay the inheritance tax when it is due.
Some changes are already in place. The new £2.5 million cap on agricultural property relief and business relief is now in effect. This has led to many business owners, farmers and entrepreneurs thinking about their approaches to estate planning.
It is important for individuals who may be impacted by this change to have a plan, starting with a clear assessment of the value of qualifying assets and how the changes may have impacted them. While sometimes a difficult conversation, people should make sure they have a ‘disaster plan’ in case of a sudden death. It’s also advised to have conversations around succession with family and any co-owners so you can understand their appetite for taking on the business.
As this change impacts a complex area of tax, seeking professional advice to discuss tailored solutions is recommended.
Stuart Lamont is a director and wealth manager at RBC Brewin Dolphin