Labour Plans Cash ISA Allowance Cut Remain On Hold

The UK government, under Chancellor Rachel Reeves, has decided not to implement immediate changes to the £20,000 tax-free cash ISA allowance, keeping plans to reduce it on hold. This decision aims to maintain incentives for savers while the Treasury continues consultations with banks, building societies, and investment firms about potential reforms to encourage more investment in stocks and shares. Importantly, the government has ruled out any retrospective changes, ensuring that money already saved in cash ISAs will not be affected by future allowance cuts, which are rumored to possibly reduce the annual limit to as low as £4,000 or £5,000. Industry voices, such as the Building Societies Association and financial planners, have welcomed the pause and the assurance against retrospective changes, highlighting the importance of cash ISAs for financial resilience and warning against reforms that could disincentivize saving or harm the housing market. The government continues to emphasize the need to boost investment culture without unfairly penalizing savers who rely on cash products for stability. Any potential changes to the cash ISA allowance are unlikely to take effect before April 2026.