Chancellor John Healey has confirmed in today's Budget that he will reverse a decision by his predecessor Rachel Reeves to cut the annual ISA allowance from £20,000 to £12,000. The tax-free Cash ISA limit will remain at £20,000 per year for people of all ages.
Reversal of the ISA cut
Ms Reeves announced the ISA reduction for savers aged under 65 at the Autumn Budget last year, with the change set to come into effect in April 2027, as she looked to encourage investment in the stock market. The proposal was widely criticised for impacting a well understood and well liked savings product and was seen as unlikely to tempt savers to put money into riskier investments.
Mr Healey told the Commons: “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.” He added: “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. I will work with the sector to create a new ‘Starter ISA’ to reward first-time investors.”
Budget measures on energy bills
Mr Healey, appointed Chancellor by Prime Minister Andy Burnham on July 20, 2026, focused his Budget on the cost of living crisis, aiming to offer households “breathing space”. He covered changes to minimum wage, tax and energy bills.
He announced that millions of households across the UK will receive a £100 payment to help with energy bills this winter. Mr Healey said: “I know rising energy bills are a real worry and people look to government to give them a bit of breathing space. So this winter for 20 million households in council tax bands A to D, I am announcing a £100 energy payment for households.”
He added: “The Scottish, Welsh and Northern Ireland governments will receive their share of the funding, but I call on them to do the same and give people in all nations in the UK breathing space on their energy bills this winter.”
Standing charges removal
The announcement followed news that the government would be removing standing charges on gas bills. These are added to bills regardless of how much gas a customer uses. The Chancellor will ask Ofgem to deliver removal of these charges – which are £108 a year for the typical household on average – in 2027 or as soon as possible after.
The aim is to tackle the cost of living crisis and give households “breathing space”. Instead, these fixed costs will be paid on the unit rate, which could save 60% of account-holding households around an average of £45 off their annual bill.
