Report: John Healey Reverses Cash ISA Limit Cut Ahead of UK Budget
Key Facts
British Chancellor John Healey has decided to reverse the planned cut to the cash Individual Savings Account (ISA) allowance, according to a Financial Times report cited by Reuters ahead of the budget statement scheduled for 28 October. Reuters said it could not immediately verify the report, so the reversal remained a reported development rather than an independently confirmed one by the agency. If confirmed, it would mark a change to the published plan, which would have reduced the amount savers under 65 could deposit in cash in tax-free accounts. The proposal set the limit at £12,000 a year, while keeping the overall cap across all types of Individual Savings Accounts at £20,000. The report comes as the government prepares to present its budget, raising the prospect of a change to the scheduled rules before they take effect.
Under the published government plan, the cut to the cash ISA limit was due to take effect from 6 April 2027 and apply to people under 65. The cash deposit limit for this group would have been £12,000 a year, while the overall limit that could be allocated across Individual Savings Accounts would remain £20,000. The plan would therefore not have removed the total tax-free allowance, but would have reduced the portion available in cash accounts for people under 65. Those aged 65 or older were due to retain an annual cash limit of £20,000. The change was scheduled to begin on the same date for both groups, according to the published government details.
The government initially presented the cut as a way to encourage individual investment. The Treasury said historical trends suggest that individual investment gives savers better returns over the long term. That goal puts the policy in practical tension with cash savings options, as the proposal would have restricted how much people under 65 could direct into cash accounts while leaving the overall account limit unchanged. Available sources did not attribute to the government an explanation that the possible reversal was intended to support savers or strengthen banks' liquidity. The official rationale for the original plan therefore remains to direct more savings toward individual investment in pursuit of better long-term returns, while the cited report gave no official explanation for the reversal itself.
According to the House of Commons calendar, John Healey was scheduled to deliver the budget statement on Wednesday 28 October, at about 12:30 p.m. local time, after Prime Minister's Questions. The timing gives the government an opportunity to present any change to the cash savings account rules as part of its fiscal plan, but the report alone does not establish whether the reversal will appear in the speech or in the budget documents. The Treasury is due to publish the budget's technical documents after the statement. Three days have been set aside for parliamentary debate on the budget decisions afterward. Proposals requiring legislative approval would need a new Finance Bill presented to Parliament, which enacts the Chancellor's proposals set out in the budget statement.