Overview
- Chancellor John Healey confirmed in his Budget on Wednesday that the annual cash ISA limit will remain £20,000 for people of all ages and that the planned cut to £12,000 for under‑65s will not go ahead.
- Healey said the government will work with the investment sector to develop a new 'Starter ISA' aimed at rewarding first‑time investors while using education rather than cuts to nudge savers into the stock market.
- Banks and building societies broadly welcomed the U‑turn, arguing it protects a major source of retail deposits that many lenders use to fund mortgages and support first‑time buyers.
- Retail brokers and some investment firms criticised the decision as a lost chance to shift household cash into equities, and providers face wasted IT and compliance costs after preparing for the now‑abandoned changes.
- HMRC figures show large ISA flows—about £135.7bn subscribed to adult ISAs in 2024–25 driven largely by cash ISAs—so the final legislation and any design details for the Starter ISA will determine the policy’s consumer and market impact.