Cash ISA Allowance Cut: Key Details Savers Need to Know
Chancellor Rachel Reeves is expected to announce a reduction in the Cash ISA allowance in her Mansion House speech on July 15, marking the first major ISA reform since 2017.
What’s Changing?
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Current allowance: £20,000 per year (tax-free)
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Proposed change: Cash ISA limit to be reduced (final figure still under discussion)
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Goal: Encourage savers to invest in stocks & shares ISAs for better long-term returns
Why Is the Government Making This Change?
Reeves has stated she won’t cut the overall ISA allowance (£20k remains) but wants to:
✔ Boost investment in equities (stocks & shares ISAs)
✔ Improve returns for savers beyond low-interest cash savings
✔ Align with pension reforms to grow long-term wealth
How Will This Affect Savers?
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Cash ISA users: Likely to see lower deposit limits, pushing them toward investment ISAs
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Stocks & Shares ISA holders: No changes expected—still £20k allowance
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Lifetime ISA (LISA): Already capped at £4,000/year—may also see reforms
Who Will Be Most Impacted?
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7.8 million cash ISA holders (vs. 3.8 million investing ISA users)
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Average cash ISA deposit: ~£4,330 (2021-22 data) – most savers may not hit the new limit
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Conservative savers: Those avoiding risk may see fewer tax-free cash options
What Should You Do Now?
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Review your savings – If you rely on cash ISAs, consider fixed-rate accounts (some offer 5%+).
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Explore investing – Stocks & shares ISAs could offer higher growth potential.
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Wait for official details – The exact new Cash ISA limit will determine the best move.
