Chancellor Rachel Reeves is poised to announce a major shake-up for savers, with reports suggesting the annual cash ISA allowance could be halved. The potential move would see the amount individuals can save into these tax-free accounts each year reduced from £20,000 to £10,000.
What We Know About the Proposed ISA Changes
According to a report from The Financial Times, the Labour Chancellor is actively considering the cut as part of her upcoming Autumn Statement, scheduled for November 26, 2025. This is not the first time such a change has been mooted; earlier in the year, there were discussions of an even lower limit of £4,000 or £5,000.
Currently, UK residents can save or invest up to £20,000 per year across different types of ISAs without paying tax on the interest or investment returns. The proposed change would specifically target the cash ISA component, leaving the overall annual subscription limit intact but restricting how much of it can be placed in cash.
Official Stance and Expert Advice for Savers
Despite the speculation, the Chancellor told the BBC in May that she was "not looking at reducing the overall ISA limit of £20,000." The government's stated aim is to rebalance the nation's savings habits. A Treasury spokesperson recently emphasised that while cash savings are important for a "rainy day," the Chancellor wants to "get Britain investing again" to help both British companies grow and savers earn better returns.
This sentiment was echoed by City Minister Lucy Rigby, who highlighted the long-term performance gap at a recent Investment Association dinner. She stated that £1,000 invested annually in a stocks and shares ISA since 1999 could now be worth around £83,000, compared to roughly £34,000 in a cash ISA.
In light of the rumours, financial expert Martin Lewis of MoneySavingExpert.com has urged calm. He advised savers on social media platform X to "keep going" as normal, confirming that any changes would likely only affect future contributions, not money already saved in existing cash ISAs.
The Bigger Picture: Encouraging Investment
The potential policy shift appears to be a strategic move by the government to stimulate retail investment in the UK. Back in March, Chancellor Reeves said she was seeking to "get the balance right between cash and equities to earn better returns for savers" and to "boost the culture of retail investment" across the country.
With the Autumn Statement just days away, millions of savers across the UK are waiting to see if these reports become reality, a decision that could significantly alter the British personal savings landscape.
