Treasury Considers Cutting Cash ISA Allowance, Decision Delayed to Autumn Budget

Proposed reforms aim to shift savings from cash ISAs to equities, but concerns grow over potential impacts on savers and mortgage rates.

Chancellor Rachel Reeves is exploring reforms to cash ISAs, including reducing the annual tax-free savings limit from £20,000 to £4,000 to encourage investment in equities.
The Treasury has confirmed that no changes will be announced in the upcoming Spring Statement, with any reforms likely delayed until the Autumn Budget and implementation not expected before April 2026.
Building societies and mortgage providers warn that reducing cash ISA allowances could decrease funding for mortgages, potentially raising rates and limiting options for first-time buyers.
Critics argue the reforms may disproportionately affect cautious savers and fail to guarantee increased investment in UK equities, particularly during a period of stock market volatility.
More than 18 million people currently hold cash ISAs, with approximately £300 billion in savings, highlighting the widespread reliance on these accounts for tax-free savings.