Cash ISA cut 'set to reversed in Budget announcement today' in boost for savers

Cash ISA cut 'set to be reversed in Budget announcement today' in boost for savers The cash ISA allowance is currently set at £20,000 a year but is due to be slashed to £12,000 from next April for under-65s Chancellor John Healey is reported set to announce a reversal of the planned cut to the cash ISA allowance in his Budget today. The cash ISA allowance is currently set at £20,000 a year but is due to be slashed to £12,000 from next April for under-65s. But the FT reports that the Chancellor is set to scrap this in his Budget today, meaning the cash ISA limit will remain as it is for savers. The cutting of the cash ISA allowance was announced in the 2025 Budget by then-Chancellor Rachel Reeves, with government hoping that it will encourage younger savers to invest in the stock market instead. Over-65s were not affected by the cut, and their cash ISA allowance was always going to remain at £20,000. Any interest earned on money saved into an ISA account is free from tax. Outside of ISA accounts, basic rate taxpayers pay 20% tax when they earn more than £1,000 a year in interest. Higher rate taxpayers pay 40% tax when they earn more than £500 in interest a year. Additional rate taxpayers have to pay 45% on any savings interest they make. Tom Selby, director of public policy at AJ Bell, said: “While the central aim of encouraging more people to invest for the long-term was the right one, the route Healey’s predecessor chose to achieve this was painfully convoluted, hardening the border between short-term saving and long-term investing and adding overwhelming complexity – not to mention a tax charge – into the system in the process. “To make matters worse, by creating a ‘buy now while stocks last’ environment for the full £20,000 Cash ISA allowance until April next year, in the short-term the policy was all-but-guaranteed to achieve the opposite of the stated aim of boosting retail investing, as people piled into cash while they could still do so under the current allowance.”