Government should not cut the Cash ISA allowance, says committee

Saturday, 25 October 2025 09:15

Cutting the Cash ISA allowance is unlikely to incentivise people to invest their cash in stocks and shares, a new report by the Treasury Select Committee warns. Read the report Inquiry: Lifetime ISA Treasury Committee The Government should, therefore, not cut the Cash ISA limit in the hope of persuading people to switch to stocks and shares. The focus should be on improving financial literacy and enhancing access to good advice and guidance so...Request free trial

Cutting the Cash ISA allowance is unlikely to incentivise people to invest their cash in stocks and shares, a new report by the Treasury Select Committee warns.

The Government should, therefore, not cut the Cash ISA limit in the hope of persuading people to switch to stocks and shares. The focus should be on improving financial literacy and enhancing access to good advice and guidance so that people can make informed decisions with their savings.

Reducing the allowance would also have other negative knock-on effects for consumers. Building Societies depend on Cash ISA savings as a critical funding source for their mortgage lending. If this was reduced, it would mean a less competitive market for financial products and consequently higher prices for consumers.

Earlier this year, the then Economic Secretary to the Treasury, Emma Reynolds MP, told the Committee that the Government was ‘looking at striking a better balance between cash and equities' for savers. Ms Reynolds said this was because the Treasury were aware of ‘many people putting cash aside who could and might consider investing in stocks and shares'.

Cash ISAs are the most widely used type of ISA. In the 2023/24 tax year, 66% of all ISA contributions were to Cash ISAs, bringing total Cash ISA holdings to £360 billion.

Chair comment

Chair of the Treasury Select Committee, Dame Meg Hillier, said:

“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.

“A comprehensive effort to genuinely improve financial education and establish accessible, high quality financial advice and guidance for people should be the Treasury's priority. This Government is meant to be supportive of mutuals, with a manifesto commitment to grow the sector, so it must carefully consider how changes could badly impact Building Societies, which provide affordable mortgages for so many.

“This is not the right time to cut the Cash ISA limit. Instead, the Treasury should focus on ensuring that people are equipped with the necessary information and confidence to make informed investment decisions. Without this, I fear that the Chancellor's attempts to transform the UK's investment culture simply will not deliver the change she seeks, instead hitting savers and mortgage borrowers.”