28 October 2026
If you are covering reports in the Financial Times that the planned cut to the Cash ISA limit from £20,000 to £12,000 will be reversed at the Budget, please see the following comment from Jo Harris, chief customer and operations officer at Quilter:
“Reports suggest that John Healey agrees with the diagnosis that the nation is suffering from something of a cash obsession, but also that cutting the Cash ISA allowance was the wrong prescription.
“For those able to take a long-term view and accept investment risk, investing offers greater potential for long-term growth than leaving excess money in cash, and public policy should encourage more people to consider it. There is no question too much long-term money in the UK is sitting in cash when some of it could be invested. HMRC data shows cash accounted for 66.2% of ISA subscriptions in 2023/24, while Cash ISA subscriptions increased by £27.9 billion, or 67%, in just one year. That is a pretty stark illustration of the challenge policymakers are trying to address.
“But the proposed cut was always likely to do very little to tackle that problem. Only 22.7% of ISA subscribers used their full allowance in 2022/23, while 41.9% put away less than £2,500. For the vast majority, cutting the Cash ISA limit from £20,000 to £12,000 would therefore have changed very little. It risked adding complexity without addressing the reasons so many people prefer to hold their savings in cash.
“There is a positive in retaining a simple £20,000 allowance that savers understand. But if the Chancellor believes carrot is better than stick, there are other options. Rather than restricting the existing ISA allowance, the government could consider an additional investment-only allowance on top of the £20,000 ISA limit, alongside better financial education and support to give people the confidence to invest.
“If the £12,000 Cash ISA limit is abandoned, the Chancellor should also finish the job and ditch the anti-circumvention rules designed to enforce it. Restrictions on transfers, the proposed 22% charge on interest from cash held within non-cash ISAs and rules around cash-like investments would leave considerable complexity behind to support a policy that no longer exists.
“There is also a lesson here about how policy is made. The industry has already spent an inordinate amount of time and resource preparing its systems, products and customer communications for these changes. That is time that could have been spent innovating and improving outcomes for customers. Policy inevitably changes, but announcing complex reforms and asking firms to prepare for them only to reverse course before they take effect is the worst kind of policymaking.”
