Chancellor John Healey has confirmed that Cash ISA limits will not be cut, reversing a planned reduction to £12,000. The £20,000 annual allowance will remain in place from April 2027.
Planned Cut Reversed
The new limit of £12,000 was set to come into force from April 2027 under Prime Minister Andy Burnham, having been announced by former Chancellor Rachel Reeves. Reeves introduced the rules following years of speculation about cuts to the tax-free savings accounts, in what she said was a bid to encourage Brits to invest in the stock market rather than hold cash reserves.
Under the proposed rules, savers would only have been able to deposit £12,000 into Cash ISAs from next April, down from the current £20,000. Any extra money saved outside ISAs would have been subject to tax.
Reeves' Policy Scrapped
In her last Autumn Budget, Reeves announced the cut to Cash ISAs despite objections from financial campaigners such as Martin Lewis. However, the MoneySavingExpert founder welcomed the exemption for older people, which he had been pushing for.
Cash ISAs, which allow savers to put money away tax-free each financial year, had been under scrutiny. At one point, rumours suggested the limit could be set as low as £10,000.
New Limits Confirmed
Healey is now pulling the plug on Reeves' ISA plans, which were still scheduled to go into effect from April 6, 2027. Cash ISA limits will be set at £20,000, the same as before, from April 2027.
Households will be able to deposit £20,000 into as many Cash ISAs or Stocks and Shares ISAs as they like in a single tax year, as long as total deposits don't exceed £20,000 in a tax year running April to April. Healey has committed to keeping Reeves' Income Tax exemption for state pensioners.
