Chancellor John Healey has scrapped a planned HMRC rule change that would have reduced the amount savers under 65 could put into cash ISAs to £12,000 per year. The change was due to take effect in April 2027.
The policy, announced by former Chancellor Rachel Reeves, was intended to encourage more people to invest their money. Under the original plan, the overall annual ISA limit would have remained at £20,000, with the £8,000 difference having to be placed into a stocks and shares ISA.
Budget announcement keeps cash ISA at £20,000
During the Budget this lunchtime, Mr Healey said he would not proceed with the rule change, instead keeping the cash ISA limit at £20,000. He also announced the creation of a new type of ISA for those who wished to invest.
Speaking to the Commons, he said: “88% of people will pay no more tax on their savings and I am taking a new approach today to encourage people on ordinary incomes to save and to invest.
“I will not go ahead with the cut to the tax-free amount that people can put into a cash ISA. The limit will stay at £20,000 per year, tax-free, for people of all ages and to make investment accessible.
New Starter ISA for first-time investors
Mr Healey added: “I will work with the sector to create a new ‘Starter ISA’ to reward first-time investors.”
The decision reverses the previous policy and maintains the existing £20,000 annual limit for cash ISAs across all age groups.
