Chancellor John Healey is expected to scrap the planned reduction in Cash ISA allowances, a move finance experts are welcoming. The change would reverse a decision by his predecessor, Rachel Reeves, who announced the allowance would drop from £20,000 to £12,000 from April 2027 for under-65s in her Autumn 2025 Budget.
According to the Financial Times, Mr Healey concluded that cutting the allowance is the wrong way to encourage more people to invest in stocks and shares. Jason Hollands, managing director at online investment platform Bestinvest by Evelyn Partners, said it would be "welcome news for savers".
Experts react to expected U-turn
"Encouraging more people to invest is a worthy and welcome project but cutting the amount people can save in a Cash ISA seemed like a blunt instrument to try and achieve this," Mr Hollands said. "I suspect many of those who would have felt limited by the planned reduction to Cash ISA allowances for under 65s would simply have put their cash in taxable savings account instead, making them worse off."
A number of providers have raised rates on their fixed ISAs over the past week, including Aldermore, Zopa and Castle Trust Bank. Moneyfactscompare has spotlighted the nine "best" fixed-rate accounts, available to new customers.
One to three-year Cash ISAs
Zopa has topped the Moneyfactscompare charts for a one-year account, paying a market-leading 5% monthly on its Smart ISA - 1 Year Fixed Term ISA. Savers can open this app-only account with just £1, or by transferring a minimum of £500 from an existing ISA. They can deposit funds for another 30 days before access is shut off for the year.
For a slightly longer term, savers can also secure a fixed rate of 5% on Aldermore’s 15 Month Fixed Rate Cash ISA. This online-only account pays interest monthly or on anniversary on an opening deposit of £1,000 or more.
Castle Trust Bank has joined UBL UK at the top of the charts for two-year and three-year fixed ISA rates. Its two- and three-year Fixed Rate e-Cash ISAs pay 5.10% and 5.15% respectively on maturity, with a minimum opening deposit of £1,000. Available online or via mobile app, these ISAs have the added feature of being "green", since Castle Trust Bank will plant a tree whenever one is opened and funded.
Five-year Cash ISAs
UBL UK’s 2- and 3 Year Fixed Rate Cash ISAs pay the same market-leading 5.10% and 5.15% to top their respective charts. The provider is also offering the joint market-leading rate for a five-year account, paying 5.25% on its 5 Year Fixed Rate Cash ISA. Savers can open these ISAs online, via the app, in branch or by post with a minimum deposit of £2,000, and early access is not permitted.
The joint-leading five-year account comes from Aldermore. Its online-only 5 Year Fixed Rate Cash ISA also pays 5.25%, but requires a slightly smaller minimum opening deposit of £1,000. Shawbrook Bank is also paying 5.25% on its 5 Year Fixed Rate Cash ISA - Issue 67. Savers can open this ISA online by depositing £1,000 or more and, unlike many other fixed ISAs, they can continue adding to their account during the whole five-year term. However, all transfers in from an external provider must be made at the time of the initial application.
