Autumn Budget 2025: Will Reeves cut the annual cash ISA limit to £12,000?

Latest rumours in the Financial Times suggest that the annual cash ISA allowance will be lowered to £12,000.

The Chancellor of the Exchequer, Rachel Reeves, will reportedly cut the amount that savers can deposit into cash ISAs each tax-year from £20,000 to £12,000 in tomorrow’s Budget (26 November).

As revealed in the Financial Times, insiders close to the Budget preparations said that Reeves had decided to lower the cash ISA limit to almost half of the current allowance.

Although the rumoured £12,000 figure is higher than the £10,000 that was previously suggested, this is likely to come as a blow to savers and other supporters of cash ISAs, particularly after a group of MPs urged Reeves not to lower the allowance last month.

Read more: What could the Autumn Budget 2025 mean for your finances?

A report in October by the Treasury Select Committee warned that changing the limit was “unlikely to incentivise people to invest their cash in stocks and shares”.

“The Committee is firmly behind the Chancellor’s ambition to create a culture in the UK where savers are sensibly investing their money and getting better returns through well-informed financial decisions. But we are a long way from that point,” said Dame Meg Hillier, Chair of the Treasury Select Committee.

Instead of cutting the allowance, Hillier said the Treasury should “focus on ensuring people are equipped with the necessary information and confidence to make informed investment decisions”, without which she feared “the Chancellor’s attempts to transform the UK’s investment culture simply will not deliver the change she seeks” and will hit both savers and mortgage borrowers.

Although Reeves seems set to announce a cut to the cash ISA allowance in tomorrow’s Budget, she has apparently also abandoned plans to introduce a “Brit ISA” which could have complicated the situation for providers and savers alike.

The effect on consumers

Cash ISAs are often crucial for those who would otherwise be taxed on interest earned from their savings.

While the Personal Savings Allowance (PSA) enables basic-rate taxpayers to take home £1,000 in savings interest before being taxed, higher-rate taxpayers receive a much smaller allowance of £500 and additional-rate taxpayers don’t qualify for an allowance at all.

With many seeing their PSA reduced due to fiscal drag (a combination of wage inflation and frozen Income Tax bands pushing people up the tax ladder), and some savings accounts still offering higher returns than in previous years, ISAs have become a popular way to shield money from the taxman. This is evidenced by the record-breaking £12.9 billion (seasonally adjusted) ploughed into cash ISAs in April 2025 alone.

But, savers may be left with no other option than to find an alternative home for their money if the Chancellor commits to cutting the cash ISA limit in the Autumn Budget.

“Ultimately, the Government has a goal to stimulate growth, but they must not penalise savers who have no desire to invest,” said Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

“It’s vital that they tread carefully with any reforms and ensure they review the financial education surrounding investing to protect consumers,” she added.

However, it’s not just savers who stand to lose; as many banks and building societies rely on deposits to fund their mortgage lending, the Treasury further warned that lowering the ISA allowance could result in a “less competitive market for financial products and consequently higher prices for consumers”.