State pensioners born before 1962 are being told they are exempt from a cash ISA shake-up announced by Labour Party Chancellor Rachel Reeves. Ms Reeves is set to change cash ISA rules from 2027, but under-65s will be exempt. This means anyone born before 1962 will be spared from the changes.
Details of the ISA shake-up
Under the new rules, the cash ISA allowance will be cut from £20,000 to £12,000, with the adjustment being introduced in April 2027. NatWest, which has branches in Birmingham, explains: "You’ll be able to put up to £12,000 in a cash ISA each tax year. The rest – up to £8,000 – could go into a stocks and shares ISA. Or, you can choose any combination that suits you, as long as you don’t exceed £12,000 in a cash ISA and your total across both types of ISAs doesn’t go over the £20,000 total ISA allowance."
Exemption for over-65s
The annual limit for stocks and shares ISAs remains at £20,000. For those aged 65 or over, these changes do not apply. The full £20,000 annual ISA allowance will remain, which can be used across all ISAs.
Martin Lewis reacts
Speaking out over the impending rule change, BBC and ITV star Martin Lewis said: "There's logic in here based on the policy aims. While I would've preferred a carrot, not stick approach – this isn't as bad as it could've been, £12,000 per year is still a reasonable whack for many people." He added: "The stated aim was not to raise revenue, but to encourage young people to invest rather than save – both for the economy, but also because on average it outperforms."
Lewis continued: "When I met the Chancellor on this a few weeks ago, I pointed out that a blanket cut to the limit would be perverse; to cut cash ISA limits for older people to encourage younger people to invest wouldn't work. So, the carve out for over-64s makes total sense and I'm pleased she listened." He concluded: "What needs to happen along with this is better investment education, easier access to guidance, and better investment incentives for young people."
