Chancellor John Healey is expected to announce that he will drop planned cuts to the Cash ISA tax-free allowance as part of today's Autumn Budget, according to the Financial Times.
The change would see the reversal of former Chancellor Rachel Reeves's plans
The Cash ISA allowance was set to be cut from £20,000 to £12,000 for savers under 65 from April in a move to encourage savers to invest more in the stock market.
The move, along with plans to tax interest held in Stocks and Shares ISAs, has been widely criticised.
Winston Ruddick, senior Financial Planner at consultancy Broadstone, said a protection of the current Cash ISA allowance is welcome news for advisers.
He said: “While encouraging more people to invest is a sensible ambition that could boost long-term returns and channel more capital into UK equities, restricting access to tax-efficient cash savings was always a blunt instrument to achieve this.
“Cash ISAs are a simple, accessible and widely understood savings product, often providing a first step towards building longer-term savings habits and financial security. They play a vital role in Financial Planning, particularly for those with shorter-term savings goals or a lower appetite for risk.”
Tom Selby, director of public policy at platform AJ Bell, expects anti-avoidance measures also set to be introduced for ISAs to also be dropped. Namely the proposed ban on transfers from Stocks and Shares ISAs to Cash ISAs and a 22% tax charge on cash or ‘cash-like’ investments held in Stocks and Shares ISAs.
Mr Selby called for the government to return to an ISA simplification strategy, creating a single ISA combining cash and investing, rather than adding more red tape to an already complex system.
He said: “Rachel Reeves’ ISA reforms were a car crash, lamented by most of the retail investment industry, who criticised the complexity they would add for little consumer benefit, and building societies, who warned they would increase mortgage costs.
“Given the Prime Minister’s main focus is on easing cost-of-living pressures, we shouldn’t be surprised that the Cash ISA cut is set to be unceremoniously ditched.”
Around £135.7bn was subscribed to adult ISAs in 2024 to 2025 (the latest year for which data is available), an increase of £32.7bn compared to 2023 / 2024 - with Stocks and Shares ISA subscriptions increasing by 20% to £31.3bn.
The upward trend in new accounts is largely attributable to the increase in the number of Stocks & Shares ISAs subscribed to (802,000 new accounts to over 4.89m total). The number of cash accounts subscribed to rose to 10.71m, representing 64% of all accounts.
Despite the increase in Stocks & Shares ISA subscriptions, the majority of the expansion in terms of volumes saved was driven by the rise in Cash ISA subscriptions, which grew by 38% to £95.6bn.