Big ISA Changes May Be Coming - Here’s What Savers Need to Know

In a move that could reshape how Britons save, Chancellor Rachel Reeves is expected to reduce the amount that can be held in a Cash ISA, according to multiple reports ahead of her upcoming Mansion House speech. The goal? To encourage savers to shift their money into investments – and, in turn, support UK-listed companies.

But what does this mean for you – and your financial plan?

What’s Changing?

While the total ISA allowance of £20,000 per tax year is expected to remain unchanged, it appears the cash portion of that allowance will be capped, limiting how much you can shelter in cash while retaining the full tax benefits.

This would mark one of the most significant reforms to the ISA system since its creation in 1999.

Why Is This Happening?

The government wants to revitalise the UK stock market and reduce reliance on cash savings, especially as more people have moved money into Cash ISAs to benefit from higher interest rates.

From a macro perspective:

• There is nearly £300 billion held in Cash ISAs.

  
  

• Many policymakers believe this money could be more “productive” if channelled into shares and funds that support British businesses and offer the potential for better long-term returns.

  
  

• Rising savings tax receipts and inflation risks are pushing the Treasury to reconsider how tax advantages are allocated.

Why It Matters for Savers

On one hand, it’s true that long-term investing in equities has historically outperformed holding cash. On the other hand, cash provides stability, liquidity, and peace of mind, especially during uncertain times.

A cut to the Cash ISA allowance could mean:

• Reduced flexibility for risk-averse savers.

  
  

• More pressure to invest, even for those still building confidence or approaching retirement.

  
  

• A need to rethink how to balance your savings and investments tax-efficiently.

How a Financial Adviser Can Help

Reforms like these are a reminder of the value of advice - especially when policy shifts can impact both your strategy and your outcomes.

We help our clients:

• Build a balanced ISA strategy that suits their time horizon and risk profile.

  
  

• Maximise tax efficiency across cash, stocks and shares ISAs, pensions, and general investment accounts.

  
  

• Understand when and how to invest, especially if transitioning from cash into markets.

  
  

• Evaluate options for low-risk investing that go beyond traditional savings accounts.

Looking Ahead

The Chancellor’s Mansion House speech in July is expected to include further detail on these proposed changes. If the cash ISA cap is cut, it will affect both how you save and how you invest.

If you hold significant cash savings or are unsure how these changes might affect your plans, now is a good time to start the conversation.