The Andy Burnham government will oversee a major Cash ISA rule change from next spring, giving pensioners aged 65 and over an extra £8,000 in tax-free savings allowance. Former Chancellor Rachel Reeves confirmed the change last year, and despite her sacking this week, the plan has been fully detailed in government documents.
Cash ISA Allowance Changes
At the Budget in November, before Reeves was replaced by John Healey, she announced that from April 2027, the Cash ISA allowance would be reduced to £12,000 for most savers. However, the limit for Stocks and Shares ISAs and Innovative Finance ISAs would remain at £20,000. Crucially, the Cash ISA allowance for those aged 65 and over would stay at £20,000, providing a significant boost for pensioners.
This means that from next spring, older savers will be able to put up to £20,000 into a Cash ISA each year without any tax implications, compared to the lower limit for younger savers. The additional £8,000 allowance is designed to support pensioners in managing their savings more effectively.
Burnham's First Full Day as PM
The announcement comes as Andy Burnham begins his first full day as prime minister. He has also pledged to cut tax on electricity bills, but the former right-hand man of Sir Keir Starmer has admitted the pledge is “unfunded”. The Liberal Democrats leader, Sir Ed Davey, criticised the move, telling Sky News on July 21: “I don’t think it’s the best way to help people with the cost of living or energy bills. If I’m honest with you, I don’t think it’s very big, actually.”
Davey expressed concern about “little headline grabbing policies without clear costings” and called on the new PM to hold a budget in early October. A budget is due in the autumn, with a date yet to be set. John Healey, the new Chancellor, will lead the fiscal statement.
