The British government is preparing to halve the annual cash allowance for tax-free Individual Savings Accounts (ISAs) as part of its upcoming November budget, according to The Telegraph.
💡 Key Changes Expected
- The annual cash ISA limit, currently set at £20,000 ($26,842), could be cut to £10,000 or slightly higher.
- The change aims to encourage more investment in UK shares and revive London’s capital markets.
- Financial Services Minister Lucy Rigby said the goal is to “build a shareholding democracy” by rebalancing tax incentives between cash and equities.
📊 Market & Policy Context
- Around one-third of Britons hold ISAs, with £726 billion saved across all accounts. Most, however, are cash-based, not invested in markets.
- The Labour government believes the new policy could redirect more household savings into productive investments that support domestic companies.
⚠️ Pushback from Parliament
The Treasury Committee warned the change could:
- Fail to boost retail shareholding,
- Reduce mortgage liquidity (as building societies use ISA deposits for mortgage lending), and
- Penalize cautious savers.
The committee emphasized that the core issue is financial education, not the size of the cash allowance.
A final decision on the revised limit is expected before the November budget announcement.