Financial guru Martin Lewis has delivered his verdict on the recent Budget, highlighting that one significant change to savings rules 'isn't as bad as it could've been'.
Following Chancellor Rachel Reeves' announcements, the founder of MoneySavingExpert.com provided a detailed breakdown on his website and in a special Budget podcast, focusing particularly on the future of Individual Savings Accounts (ISAs).
The Upcoming Cash ISA Shake-up
A central point of Lewis's analysis concerns major adjustments to cash ISAs scheduled for April 6, 2027. Currently, savers can place up to £20,000 per year into one or more of the four ISA types: cash, stocks and shares, innovative finance, and lifetime ISAs.
However, from 2027, the rules will tighten for a specific group. The annual contribution limit for cash ISAs will be reduced to just £12,000 for anyone under the age of 65.
A Surprising 'Win' for Older Savers
Martin Lewis revealed that this policy shift is part of a government initiative to encourage younger people to invest rather than simply hold cash. While he expressed some disagreement with this approach, he acknowledged a critical victory in his discussions with the Chancellor.
'The win,' Lewis explained on his podcast, 'is that I argued with the Chancellor that the people with the most money in cash ISAs are older people, whom this policy is not trying to affect. I said they needed a carve-out, and we have the carve-out.'
This 'carve-out' means that individuals aged 65 or older will not see their cash ISA allowance cut and will retain the full £20,000 limit.
It is crucial to understand that the overall total ISA allowance remains at £20,000 for all ages. This means that while you may only save £12,000 in a cash ISA, you could potentially invest the remaining £8,000 in a stocks and shares ISA within the same tax year.
Lifetime ISA Consultation on the Horizon
The Budget also brought news for users of Lifetime ISAs (LISAs), which are designed to help 18 to 39-year-olds save for a first home or retirement with a 25% government bonus.
A significant issue has been the scheme's £450,000 property price limit, which has been frozen since 2017 despite substantial house price inflation.
In a move that could address this, the government has announced it will publish a consultation in early 2026 to discuss a new, simpler ISA product to support first-time buyers. This new product would eventually be offered as an alternative to the lifetime ISA.
MoneySavingExpert adds that as part of this consultation, the Chancellor is expected to review increasing the LISA property price threshold for existing savers.
