By Ahmed Abdelsalam
UK Chancellor John Healey is expected to scrap a planned reduction to the cash ISA allowance in Wednesday's Budget, restoring the annual limit to £20,000 for savers under 65.
Reversal of Reeves' Reforms
Former chancellor Rachel Reeves had introduced reforms last year that would have capped cash ISA deposits at £12,000 annually, down from £20,000, as part of a push to encourage investment. The measures were widely criticised by industry experts and building societies, who warned they would increase mortgage costs and add complexity for savers.
Industry Reaction
Tom Selby, director of public policy at AJ Bell, welcomed the reported U-turn, calling Reeves' reforms a "car crash" and crediting Healey for averting the changes. Jo Harris, chief customer officer at Quilter, argued the original cut would have done little to shift savings into investments, noting most ISA subscribers do not use their full allowance.
Outstanding Issues
Other elements of Reeves' package remain uncertain, including a proposed ban on transfers from stocks and shares ISAs to cash ISAs, a tax on uninvested cash within investment ISAs, and details of a new first-time buyer ISA intended to replace the lifetime ISA. Selby urged the chancellor to also drop the "anti-circumvention" rules tied to the cash ISA cut.
Criticism of the U-turn
Not all voices supported the reversal. Michael Healy, CEO of IG Consumer, called it a "deeply misguided decision" that reinforces a savings culture holding Britain back. Maike Currie of PensionBee said the original policy risked penalising those needing help building long-term wealth, particularly women.
