Rachel Reeves has been warned that making one major change to ISAs would be the “wrong lever to pull” and negatively affect hard-working families. Experts fear that the Chancellor will cut the cash ISA allowance in her latest Budget, due to be presented on November 26, as she seeks to spark investment in the economy. Finance specialists claim that halving the tax-free limit from £20,000 to £10,000 would “send the wrong signal to savers at a time when financial confidence is already fragile”. New research from Nottingham Building Society (NBS) showed that 44% of savers do not save regularly, and almost half of over-60s (47%) prefer cash ISAs, which highlights the need to protect simple, trusted ways to save, the firm’s bosses suggest.
Two-thirds of fixed-rate ISA customers at NBS used their full £20,000 allowance in the year to date, up from three in five last year. Internal data showed that 71% of digital fixed-rate ISA customers used the full £20,000 allowance in the year to date, up from 61% in 2024.
Across both digital and branch savers, 66% used their whole allowance.
This underlines how vital the current limit is for ordinary savers, experts noted, who include “individuals and families working hard to save for the future and making full use of the system as it was designed”.
The company’s CEO, Sue Hayes, said: “The message to the Chancellor is simple: savers deserve choice. Cash ISAs are a trusted, straightforward way for people to save for the future – whether that’s a first home, retirement or an emergency fund. Restricting that choice risks doing real damage to financial confidence, at exactly the moment we should be encouraging people to save.
“We have been helping people save for their future for 175 years, supporting them on their journey to home ownership. That purpose hasn’t changed and neither has our belief that choice and accessibility must be at the heart of savings policy.
“Mutuals play a unique role in the UK’s financial system. ISAs held with building societies directly support lending to aspiring homeowners, and cutting the Cash ISA allowance would restrict that lending power, which runs counter to the Labour Party’s ambition to double the size of the mutual sector.
“We strongly urge the Chancellor to protect choice, protect confidence and protect the Cash ISA.”
In October, it was reported that several potential options had been mulled over by the Treasury regarding changes to ISAs.
NBS’s Chief Savings Officer, Harriet Guevara, said: “We understand the Government’s ambition to promote a stronger investment culture, but cutting the Cash ISA allowance is the wrong lever to pull. Cash ISAs remain one of the few straightforward, low-risk tools that help people build financial security, particularly during uncertain times.”
She added: “If the allowance is cut, one in three savers say they’d simply save less, and only 38% would consider switching to a Stocks & Shares ISA. That risks pushing people into products they don’t fully understand, or out of saving altogether. We believe in optionality and giving people the freedom to save or invest in a way that fits their goals and risk appetite.”
“Ultimately, the ISA system should empower, not penalise. Stability, clarity and choice are what savers value most, and what will keep ISAs central to building financial resilience for years to come.”
Ms Reeves said in October: “We want to help people to be able to save for mortgages, but we want people to get better returns on the money they’re investing, to put money in an Isa or indeed in a pension means that you’re sacrificing spending today to save for the future.
“And at the moment, often returns on savings and returns on pensions are lower than in comparable countries around the world, and I do want to make sure that when people put something aside for the future, they get good returns on those savings.”
