Overview
- The Labour government has confirmed it will cut the annual cash ISA allowance for people aged 18–64 from £20,000 to £12,000 and introduce a 22% tax on uninvested cash inside Stocks & Shares ISAs, with the rules due to take effect on 6 April 2027.
- Bank of England data show households front-loaded deposits, with a £12bn surge into cash ISAs in April followed by a further £3.1bn in May as savers used the current £20,000 allowance while it still applies.
- The May figures also reveal shifts within cash products: savers put about £1.3bn into higher-paying fixed-rate accounts and withdrew roughly £2bn from easy-access accounts, lifting total bank and building society deposits by £5.4bn.
- Chancellor Rachel Reeves has confirmed pensioners will be exempt and keep the £20,000 cash ISA limit, while commentators warn the changes may produce short-term hoarding of cash ISAs instead of the intended move into long-term investing.
- The rush raises practical risks for households because improper withdrawals and re‑deposits can cost ISA tax status, and experts say watch for whether savers instead put excess funds into taxable accounts or delay investing in Stocks & Shares ISAs.