Autumn Budget 2025: Cuts to cash ISA allowance still on the cards

Similar rumours earlier this year were met with backlash from both savers and providers.

Savers may yet see their cash ISA allowance slashed, with recent reports suggesting such a change could form part of next month’s Autumn Budget.

It was widely rumoured earlier in the year that the Chancellor of the Exchequer, Rachel Reeves, planned to lower the amount that could be saved in cash ISAs from £20,000 to £4,000 in a bid to encourage greater levels of investing. However, this didn’t come to fruition following backlash from savers as well as banks, building societies and other industry bodies.

Now, reports state the Chancellor is considering cutting the cash ISA allowance to a slightly more palatable £10,000.

The effect on savers

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.