UK Chancellor John Healey reverses planned Cash ISA allowance cut

Chancellor John Healey has decided to abandon plans to reduce the annual Cash Individual Savings Account (ISA) allowance for savers under the age of 65. The previous proposal, announced by former Chancellor Rachel Reeves, intended to slash the limit from £20,000 to £12,000 starting in April 2027 to encourage more movement of capital into the stock market.

The reversal maintains the existing £20,000 limit for all savers. This decision follows warnings from banks and building societies that restricting cash deposits could negatively impact mortgage funding, as many retail lenders rely heavily on these deposits.

Instead of reducing tax advantages on cash savings, the government intends to focus on educating savers about the benefits of stock market investment. Additionally, Healey announced plans to work with the sector to develop a new ‘starter ISA’ designed to reward and assist first-time investors.