Chancellor Healey will not go ahead with cuts to the amount people can put into a Cash ISA, as he laid out in today's Budget.
This leaves the limit at £20,000 a year “tax-free for people of all ages”, rowing back on Rachel Reeves's plans to cap the allowance at £12,000 from April 2026, as announced last year.
The majority of those who responded to the announcement welcomed the move, although with caveats, while some voices were completely against it, saying this goes against the goal of encouraging more people to invest.
Below, Trustnet rounds up the strongest reactions.
Pleased by the U-turn
According to Keith Phillips, chief executive of The Platforms Association, “common sense has prevailed” as the chancellor reversed the previously proposed cuts to the cash allowance in ISA products.
“It is the right outcome for savers,” he said.
However, he wasn’t completely satisfied, as the manoeuvre comes late, after platforms have spent “months and significant sums preparing systems, products and customer communications for a change that will now never happen”.
“Reforming stamp duty on shares is a better way of creating an investment culture”, he said, with the Pensions Commission’s report in 2027 set to be “a key moment” in deciding how more people can be encouraged to invest.
The policy may also have worked against itself, according to Greg B Davies, chief behavioural scientist at Oxford Risk.
“The irony is that a policy intended to get people out of cash may actually have encouraged some to put more money into it before the rules changed. Scrapping the cut won’t undo decisions already made in anticipation,” he said.
“But the fundamental flaw was always behavioural. People don’t hold excess cash simply because of a tax break. They do it because cash feels safe, investing feels scary, and they’re worried about getting it wrong. Removing a tax incentive doesn’t remove those emotional barriers.”
The data also suggested the cut would have made little difference, said Paul Riseborough, a partner in KPMG UK’s financial services consulting practice.
“Changing the cash ISA allowance was never likely to turn the UK into a nation of investors – 87% of cash ISA holders confirmed they wouldn’t switch to stocks and shares regardless of the lower cash limit,” he said. Retaining the allowance would also be “welcome news for savers and lenders, particularly smaller building societies that rely heavily on cash deposits to fund mortgage lending”.
For Chris Rudden, head of UK investment consultants at Moneyfarm, the bigger issue was the pace of change.
“People are being asked to make financial decisions that could affect them for decades, based on rules that keep changing,” he said, adding that while the starter ISA was welcome in principle, “adding further complexity risks creating greater confusion at a time when certainty and continuity are what savers need”.
Jason Hollands, managing director at Evelyn Partners, linked the decision to the wider tax picture for savers.
“Keeping the £20,000 Cash ISA gives savers more scope to protect their interest from tax at a time when the tax treatment of savings is becoming less favourable. Incoming higher tax on savings interest and already implemented recent increases in tax on dividends and capital gains underline the importance of making as much use of ISAs as possible whether you are a saver or an investor,” he said.
James Norton, head of retirement and investments at Vanguard, welcomed the certainty but said the work of moving savers into investing remained.
“Cash is essential for emergencies and short-term needs, but over decades inflation can erode its value. £10,000 held in cash since the end of 2004 would have grown to around £15,600, compared with around £86,400 if invested in global shares. After inflation, those figures would be around £4,100 and £74,000 respectively,” he said.
Against the change
Adrian Murphy, chief executive of Murphy Wealth, said the reversal ran against the direction of travel.
“Scrapping the planned reduction in cash ISA allowances is a backward step at a time when the UK should be doing everything it can to encourage a stronger culture of long-term investing. We’ve made real progress in helping people understand the benefits of investing and this move risks slowing that momentum,” he said.
“The danger is that many savers will continue to prioritise the perceived safety of cash without fully appreciating the long-term opportunity cost of missed returns. The challenge for policymakers is finding ways to give people the confidence to invest, not reinforcing attitudes that could leave them with less wealth in real terms over the long run.”
Kevin Brown, savings specialist at Scottish Friendly, said the decision was “surprising and hugely disappointing”.
“We supported that change as a step towards encouraging more people to consider investing and building better financial resilience across households in the UK. By reversing plans this afternoon, the government will have to answer the lingering question of how it will now deliver the investing culture it wants to create,” he said.
Changing the allowance alone “would not transform behaviour” without education and awareness campaigns and this work now “becomes even more important”.
“Keeping the allowance unchanged does little on its own to address the barriers that prevent people from taking that first step,” he concluded.