By Ahmed Abdelsalam
Chancellor John Healey is reportedly planning to reverse a decision to slash the annual Individual Savings Account (ISA) allowance from £20,000 to £12,000 in his inaugural Budget, according to the Financial Times.
Policy reversal
Healey believes the allowance cut was the wrong tool to persuade Britons to invest more in stocks and shares and would rather focus on educating savers about the benefits of equity investing.
Previous announcement
Former chancellor Rachel Reeves announced the reduction for savers aged under 65 at the autumn budget last year, with the change scheduled to take effect in April 2027 as part of efforts to encourage stock market investment.
ISA popularity and statistics
ISAs remain the UK's most popular savings product, with HM Revenue and Customs figures showing around £135.7 billion subscribed to adult ISAs in the 2024-25 tax year, a £32.7 billion annual increase driven largely by a 37.5% rise in cash ISA subscriptions.
Banking sector response
Retail banks and building societies are expected to welcome the reported U-turn, as maintaining the flow of savings deposits supports their funding and balance sheets. The move would offer some relief to an industry bracing for higher sector-specific taxes in Wednesday's Budget.
