Money saving guru Martin Lewis has issued a stark warning, labelling a key policy in the recent Budget a 'wrong move' that will impact millions of people across the UK. The financial journalist shared his analysis on ITV's Good Morning Britain, focusing on changes to the popular cash ISA.
The Chancellor's Announcement
Chancellor Rachel Reeves unveiled the Budget 2025 yesterday, outlining the government's financial plans. Among the various measures was a significant shift in savings policy: a reduction in the annual allowance for cash ISAs.
Currently, savers can deposit up to £20,000 per year into an Individual Savings Account (ISA), where interest is earned completely tax-free. From April 2027, this single limit will be split. The maximum for a cash ISA will be cut to £12,000, while the allowance for a stocks and shares ISA will remain at £20,000.
Lewis's Critique and the 'Carrot vs Stick' Debate
Speaking directly to viewers, Martin Lewis did not mince his words. "So I think cutting the cash ISA is the wrong move but the cash ISA is to be cut," he stated.
While acknowledging that £12,000 is still a substantial amount to save, Lewis explained the government's rationale. The primary goal is not to raise revenue but to encourage more people, particularly the younger generation, to invest in the stock market rather than leaving large sums in cash.
However, Lewis fundamentally disagrees with this approach. "My view is that it would be better to do that by a carrot approach than a stick approach," he argued. He advocates for better financial education, easier access to investment guidance, and direct incentives for investing as more effective and fairer methods.
A Crucial Carve-Out for Older Savers
Lewis revealed that he had held several discussions with the Chancellor over the past year, during which he raised a critical flaw in the policy's logic. He pointed out that the biggest users of cash ISAs are often older individuals who, with less time to recover from potential market downturns, understandably prefer the safety of cash.
"You're going to punish them for your policy," he told the Chancellor. This argument led to a significant amendment: a carve-out for those aged 65 and over, who will retain the full £20,000 cash ISA limit.
Lewis noted he received confirmation from Rachel Reeves that their conversation was "useful," strongly suggesting this important exemption was a direct result of his intervention.
This special provision acknowledges the different financial needs and risk appetites across generations, softening the blow of what Martin Lewis still considers a misguided policy shift for millions of other Britons.
