In a significant development for UK savers, the new Cash ISA allowance has been reportedly set at £12,000, defying earlier predictions of a lower cap. Chancellor Rachel Reeves is expected to make the official announcement as part of the Autumn Budget on November 26.
Budget Leak Reveals Higher Savings Cap
According to Treasury insiders, the proposed limit of £10,000 has been rejected in favour of the more substantial £12,000 figure. This new cap is understood to have gained significant traction within government circles as a more palatable option for the public. This move forms a key part of what is being described as the most substantial overhaul of the ISA system in a quarter of a century.
Industry Reaction Divided
The proposed changes have sparked a mixed response from financial experts. Andrew Gall, head of savings at the Building Societies Association, voiced strong opposition, stating: "We support efforts to help more people to invest and grow their wealth, especially in the UK, but cutting the cash ISA limit simply won't achieve this."
He further warned that such a move could "undermine one of Britain's most successful savings products and a stepping stone that has helped millions to build financial resilience and confidence to invest for their future."
However, this perspective was strongly countered by Michael Healy, managing director of IG, who argued: "The Chancellor is absolutely right to tackle the UK's overreliance on savings, starting with a product that does nothing for long-term wealth creation."
He dismissed building society concerns as "largely overstated", noting that any redirected funds would represent merely 0.4 per cent of building societies' total retail deposits. "Suggestions that it could threaten the mortgage market are simply scaremongering. The reality is that this reform is sensible, proportionate and long overdue," Mr Healy added.
Further Reforms Under Consideration
The shake-up doesn't stop with Cash ISAs. The government is also considering introducing a mandatory allocation to UK equities within Stocks and Shares ISAs. It is thought this could require up to £5,000 of the current £20,000 Stocks and Shares ISA allowance to be invested in British companies.
A Treasury source indicated a preference for market-led solutions, suggesting the government "wants a UK element and ideally that would be voluntary" for the sector. These developments follow months of intense speculation about the future of tax-free savings in Britain.
