Healey keeps £20,000 cash Isa limit, reversing planned cut for under-65s
The chancellor has dropped a plan to lower the annual cash Isa allowance to £12,000 from April 2027, drawing mixed reactions from savings and investment firms.
Chancellor John Healey kept the UK's annual adult cash Isa allowance at £20,000 in his Budget on 28 October, reversing a planned cut to £12,000 for savers under 65 that had been due to take effect in April 2027. The decision preserves the amount people can put into a cash Isa each year under the existing allowance.
Former chancellor Rachel Reeves announced the reduction at last year's autumn Budget as part of an effort to encourage more people to invest in the stock market. The Guardian reported before Healey's statement that he was expected to favour education about investing over restricting the cash saving allowance.
Why the cash Isa cut drew opposition
Nationwide Building Society welcomed the reversal. Its group director of retail products, Tom Riley, said more than one in three of its under-65 cash Isa savers save over £12,000. That figure describes Nationwide's customers, rather than cash Isa savers across the UK.
Finance-sector figures had warned that lowering the limit could deter saving and push up mortgage rates, The Guardian reported. The chair of the Treasury Committee also welcomed the cancellation, citing the committee's earlier concerns that the proposed changes would confuse customers and create problems for building societies that rely on cash Isa deposits.
The sums involved are substantial. According to HMRC figures cited by The Standard, subscriptions to adult Isas reached £135.7 billion in the 2024–25 tax year, £32.7 billion more than a year earlier. Cash Isa subscriptions accounted for £26.1 billion of that increase, rising 37.5%.
Investment push remains contested
Not all financial firms welcomed keeping the cash allowance. Kevin Brown, a savings specialist at Scottish Friendly, said the company had supported the cut as a way to encourage investment. Michael Healy, chief executive of IG Group's consumer division, argued that retaining the allowance would reinforce a preference for cash saving over investment, The Guardian reported.
Healey also outlined plans to work with the sector on a new starter Isa, according to The Standard. Quilter chief executive Steven Levin welcomed abandoning the cut but urged the government to simplify the Isa system rather than add to it. Moneybox personal finance director Brian Byrnes was cautiously positive about encouraging investment while warning that another Isa could make the system more complex. The product's design and eligibility were not specified in the report.
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Sources and context
- Annual cash Isa limit will remain at £20,000 after plans for cut overturnedThe Standard (Vicky Shaw; article text includes PA Archive photo credit, not an agency byline)
- Healey poised to overturn cut to cash Isa allowance in first budgetThe Guardian (Julia Kollewe and Anna Isaac)
AI-assisted article checked against the listed sources. NewsJaws did not conduct interviews or attend the reported events.