Britain will cut the tax-free cash ISA allowance from £20,000 to £12,000 starting 2027, aiming to redirect household savings into the stock market and support economic growth.
👉 Over-65s will retain the full £20,000 allowance.
The announcement by Finance Minister Rachel Reeves immediately lifted shares of online brokers:
- AJ Bell +2.6%
- IG Group +10.3%
🔍 Key Context
- Around £300 billion currently sits in cash ISAs, often generating poor returns.
- The government hopes reallocating savings into equities will revitalise London’s struggling stock market.
- However, analysts warn that risk aversion and preference for overseas markets may limit the shift.
- Treasury Committee lawmakers argue the real issue is low financial literacy, not allowances.
📈 Expert Views
- Hargreaves Lansdown: Investing could add £50,000 more in long-term returns vs. saving.
- Wealth Club: Anyone consistently maxing out a £20,000 ISA “should be thinking about equities”.
Whether this policy will genuinely transform UK investing behaviour—or simply redirect capital abroad—remains an open question.