Politics · United Kingdom · 3 hrs ago
Budget keeps £20,000 cash ISA limit and plans new starter ISA
Chancellor John Healey kept the annual cash ISA limit at £20,000, reversing a plan to cut it to £12,000.
The change affects people in the UK who use tax-free savings accounts, and preserves their existing choice to save cash.
The government also plans a starter ISA to help savers begin investing, but has not yet provided full details.
An industry-wide consultation is expected in the coming months.
For first-time buyers, a new ISA is planned to launch in April 2029, replacing the Lifetime ISA; it will keep a £4,000 annual contribution limit and a £450,000 property price cap.
Its 25 per cent government bonus will be calculated on the full balance at purchase, including interest or investment growth, and transfers from a Lifetime ISA will not be allowed.
Meanwhile, the penalty for non-qualifying Lifetime ISA withdrawals will fall from 25 per cent to 20 per cent, although the scheme is still due to end in April 2029.
Chancellor John Healey reversed a plan to cut the annual cash ISA limit from £20,000 to £12,000.
The Budget also announced a new Starter ISA intended to help people begin investing, though details remain limited.
A First Time Buyer ISA is planned for April 2029 and will replace the Lifetime ISA.
The Lifetime ISA withdrawal penalty for purposes other than a qualifying home purchase or retirement will fall from 25 per cent to 20 per cent.
- Who
- Chancellor John Healey announced the changes.
- What
- The Budget kept the £20,000 annual cash ISA limit and set out plans for a Starter ISA and a First Time Buyer ISA.
- When
- The announcements were made in the Budget on 28 October 2026. The First Time Buyer ISA is planned for April 2029.
- Where
- The United Kingdom.
- Why
- The Starter ISA is intended to help people who do not yet invest begin investing. The sources say the cash ISA limit was retained after a planned reduction was reversed.
This story does not have two clearly opposing sides.
Rachel Reeves’ plan to reduce the annual cash ISA limit from £20,000 to £12,000 was proposed.
John Healey reversed the planned cash ISA reduction and announced a Starter ISA.
The First Time Buyer ISA is planned to launch and the Lifetime ISA is due to be stopped.
- Cash ISA annual limit
- £20,000
- Reversed cash ISA limit proposal
- £12,000 per person each year
- First Time Buyer ISA planned launch
- April 2029
- First Time Buyer ISA contribution limit
- £4,000 per year
- First Time Buyer ISA property price cap
- £450,000
- Lifetime ISA withdrawal penalty
- Reduced from 25 per cent to 20 per cent
3 sources
What people are saying
The chancellor’s decision to retain the existing cash ISA allowance is welcome news for savers across the country.
We support the ambition to encourage more people to invest but believe the best way to achieve that is through better financial education and access to advice, rather than restricting choice for savers.