Fourth Special Report
The Treasury Committee published its Eleventh Report of Session
2024–26, Cash Individual Savings
Account, (HC 1422), on 25 October 2025. The Government
Response was received in the form of a letter from the Economic
Secretary to the Treasury on 18 December 2025 and is appended
below.
Appendix: Letter from MP, Economic Secretary to the
Treasury, 18 December 2025
I am writing in response to the Treasury Committee's report of 25
October 2025 (the “Report”) regarding Cash Individual Savings
Accounts (“ISAs”). I would like to thank the Committee for its
inquiry and its recommendations, and I welcome the opportunity to
respond.
The Government has carefully considered the important issues
raised in the Report, and the Chancellor set out our approach to
Cash ISAs at Autumn Budget 2025.
The Government wants to see more people benefit from the higher
returns and long-term financial resilience that investing can
provide. That is why the Chancellor has set out a series of bold
measures to get Britain investing again, including the reforms to
ISAs made at Budget.
Government's Response – Cash
ISARecommendation 1
The Government should not cut the Cash ISA limit in
the hope of persuading people to move to stocks and shares.
Instead, the Treasury must prioritise measures to promote
financial inclusion, literacy and awareness and to improve access
to advice and guidance, thereby enabling individuals to make
informed decisions about their savings and
investments. (Paragraph 16)
At Autumn Budget 2025, the Government announced that the annual
ISA allowance will be kept at £20,000 with the Cash ISA limit set
at £12,000 from April 2027 for under-65s. The Government is
introducing an age carve out for those aged 65 and above in
recognition that they may need more flexibility in how they
manage their savings as they approach retirement. Savers over the
age of 65 will continue to be able to save up to £20,000 in a
Cash ISA each year.
The recent Curriculum and Assessment Review highlighted demand
for more applied knowledge and skills in the school curriculum,
including financial literacy. DfE plan to reform the programmes
of study for maths and citizenship, ensuring that key concepts
relevant to financial education such as calculating interest are
introduced, and making citizenship compulsory in key stages 1 and
2 to strengthen pupils' foundational understanding of financial
education at an early age. This reform was also part of the
Government's Financial Inclusion Strategy, announced last month
(the “Strategy”).
Help to Save is a core part of the Strategy, supporting the
Government's wider goals on financial wellbeing and reducing
reliance on high-cost credit.
At Autumn Budget 2025, the Government also confirmed its
long-term commitment to Help to Save by making the scheme
permanently available for new savers as well as expanding the
scheme from April 2028 to all households receiving the child or
carer's element of Universal Credit.
Recommendation 2
The Government should not consider the Cash ISA in
isolation when attempting to change investment and savings
behaviour. Non-ISA bank accounts make up a large proportion of
people's savings. Savers may also benefit from tax-free savings
allowances on interest from these accounts. The Cash ISA is among
the most popular and well understood savings products in the UK.
Reducing the Cash ISA's tax-free allowance, and the publicity
which would have to go alongside such a reduction, is unlikely to
increase the level of saving in shares [in] the UK. It may be
more sensible to start any rationalisation of tax-free cash
savings by examining the case for the tax-free interest
allowance. (Paragraph 17)
Reductions in the Personal Savings Allowance would bring many
people into paying tax on small amounts of savings income,
requiring them to complete Self-Assessment forms, and creating
disproportionate additional costs for HMRC.
As part of the wider strategy aimed at supporting people to get
into investing, the Government is working with the Financial
Conduct Authority (the “FCA”) to roll out Targeted Support for
consumers from April 2026. Targeted Support will enable
authorised firms to proactively suggest appropriate products or
courses of action using limited information about a customer and
their circumstances. This could include, for example, supporting
people with excess cash savings to consider investing for the
first time, such as through opening a stocks and shares ISA. In
addition, financial services firms will provide new, easily
navigable ways for people to find the right UK investment for
them.
The Government will also allow Long Term Asset Funds to be held
in Stocks & Shares ISAs from April 2026, allowing more
individuals to invest in assets that will support the UK's future
success, like innovative businesses and infrastructure and
deliver better returns.
I look forward to continuing to work with the Committee as the
Government delivers on its ambition to boost economic growth
across the country.
MP
Economic Secretary to the Treasury
