Business · Economy · 54 mins ago
Healey reportedly plans to reverse planned Isa allowance cut
UK Chancellor John Healey is reportedly planning to reverse a cut to the annual Isa allowance in his first Budget.
The previous plan, announced by former chancellor Rachel Reeves, would have lowered the limit from £20,000 to £12,000 for savers under 65.
That change was due to take effect in April 2027 and was intended to encourage more people to invest in shares.
Isas let people save or invest while paying no tax on interest, income or capital gains.
Healey reportedly believes cutting the allowance is the wrong way to encourage stock-market investment and would rather educate savers about investing.
Keeping the allowance could also help banks and building societies retain deposits they use to fund lending, while the sector faces expected tax increases.
The reported U-turn is expected to be addressed in Healey’s Budget, but the sources do not confirm a final decision.
Chancellor John Healey is reportedly set to reverse a planned cut to the annual cash ISA allowance in his first Budget.
The proposed change would have reduced the annual limit for people under 65 from £20,000 to £12,000.
Former chancellor Rachel Reeves announced the cut last year to encourage more people in Britain to invest in stocks and shares.
The change was due to take effect in April 2027.
Industry voices have argued the cut could add complexity and affect savings deposits used by building societies to fund lending.
- Who
- Chancellor John Healey is reportedly planning the reversal. Rachel Reeves announced the proposed cut when she was chancellor.
- What
- The planned reduction in the annual cash ISA allowance is reportedly set to be scrapped.
- When
- Healey’s first Budget is due on Wednesday, 28 October 2026. The cut was set to take effect in April 2027.
- Where
- Britain.
- Why
- Healey is reportedly said to regard the allowance cut as the wrong way to encourage investment. The reports say he would prefer to educate savers about equity investing.
Rachel Reeves’s ISA reform plan
Critics in the savings and investment industry
Purpose
Rachel Reeves’s ISA reform plan
Reeves announced the cut to encourage more people to invest in stocks and shares.
Critics in the savings and investment industry
Critics argued the cut would not encourage investment effectively and could add complexity.
Effect on savers and providers
Rachel Reeves’s ISA reform plan
The proposed lower cash ISA limit was part of a plan to get more people investing.
Critics in the savings and investment industry
Critics warned the changes could reduce deposits used by building societies to support lending and could increase mortgage costs.
Rachel Reeves announced a plan to reduce the cash ISA allowance for savers under 65.
The Financial Times reported that Healey would reverse the cash ISA allowance cut.
Reports said Healey was expected to announce the reversal in his first Budget.
The proposed reduction in the cash ISA allowance was due to take effect.
- Current annual allowance
- £20,000
- Proposed annual allowance
- £12,000 for people under 65
- Planned start date
- April 2027
- Adult ISA subscriptions
- Around £135.7 billion in tax year 2024-25
- Cash ISA subscription increase
- 37.5%, or £26.1 billion, in tax year 2024-25
5 sources
Healey poised to overturn cut to cash Isa allowance in first budget
Healey ‘to scrap planned cut on cash ISA allowance’ in Budget
Chancellor to ditch Rachel Reeves' attack on cash Isas with limit due to stay at £20,000 a year
Chancellor set to U-turn on Isa allowance cut to £12,000 – reports
Healey to reverse cuts to cash Isa allowances
What people are saying
Healey deserves credit for seeing this iceberg coming and taking abortive action at the earliest opportunity
Rachel Reeves’ ISA reforms were a car crash, lamented by most of the retail investment industry, who criticised the complexity they would add for little consumer benefit, and building societies, who warned they would increase mortgage costs.
Given the prime minister’s main focus is on easing cost-of-living pressures, we shouldn’t be surprised the cash ISA cut is set to be unceremoniously ditched.
However, undoing Rachel Reeves’ calamitous reform agenda should just be the first step – the chancellor now has an opportunity to deliver on Labour’s pre-election pledge to radically simplify the ISA landscape.