Chancellor Rachel Reeves is reportedly planning to slash the cash ISA allowance in a bid to encourage more investment in UK markets. However, existing cash ISA holders can breathe easy—any changes won’t affect money already saved in these tax-free accounts.

What’s Changing?
Currently, savers can deposit up to £20,000 per year into an ISA (either cash or stocks & shares). The government is considering:

Reducing the cash ISA allowance (potentially to £4,000)

Keeping the stocks & shares ISA limit at £20,000

No retrospective changes – existing savings remain protected

Why the Cut?
The move aims to boost investment culture in the UK by steering savers towards stocks & shares ISAs, which fuel economic growth. However, critics argue it could hurt those who rely on cash savings for security.

What This Means for Savers
✅ Existing cash ISA funds stay protected – No changes to money already saved.
✅ Interest remains tax-free – Even if the allowance drops, current savings continue growing tax-free.
❌ Future deposits may be restricted – New limits could apply from as early as next tax year.

Example Scenario
A saver with £100,000 in cash ISAs earning 4% interest gets £4,000/year tax-free.

Without the ISA, they’d pay £600 (basic rate) or £1,400 (higher rate) in tax on that interest.

Industry Reaction
Rosie Hooper (Quilter Cheviot):

“It’s positive that existing savings won’t be touched. Retrospective changes would’ve been unfair and chaotic.”

Craig Rickman (interactive investor):

*”The government is right to avoid mid-year changes. Past adjustments, like the 2014-15 hike, caused confusion.”*

Over 50 financial firms have urged Reeves to keep the £20,000 limit, calling cash ISAs a “cornerstone of UK savings”.

What’s Next?
The Treasury has hinted at balancing savers’ security with economic growth, stating:

“We want savings to deliver the best returns while boosting UK investment.”

For more details, check:

BBC News on ISA reforms

Financial Times savings analysis

Final Verdict
While new cash ISA deposits may shrink, existing savings stay safe. Will this push more Brits to invest? Or simply limit tax-free saving options?

What do you think? Share your views below!