What changed at the budget
John Healey used the budget to confirm the cash ISA allowance will be set at £20,000, equal to about $26,600. His line was unambiguous: "I will not go ahead with the cut to the tax-free amount that people can put into a cash ISA."
He additionally cancelled the planned cut that was set to drop the allowance for those under 65 to £12,000 in April 2027. In addition, Healey outlined a proposal to introduce a starter ISA for first-time investors.
Why this matters now
A cash ISA is a savings account where the interest you earn is not taxed. HM Revenue and Customs reported that households added to these accounts at the quickest clip since the Covid period. Roughly 16.8 million adult ISAs saw subscriptions in 2024-25, compared with 15 million the prior year.
The Treasury select committee said last year that households held £360 billion in cash ISAs, averaging £26,900 per account.
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Industry reaction and the takeaway for your portfolio
Former Chancellor Rachel Reeves had outlined a cut to push more savers toward stocks and shares, aiming to lift the UK market and growth. That move drew voter pushback and was criticized by industry groups as unlikely to channel more money into equities.
AJ Bell's director of public policy, Tom Selby, said, "Rachel Reeves' ISA reforms were a car crash, lamented by most of the retail investment industry, who criticized the complexity they would add for little consumer benefit, and building societies, who warned they would increase mortgage costs." "Healey deserves credit for seeing this iceberg coming and taking abortive action at the earliest opportunity."
The bottom line: the £20,000 ceiling for tax-free cash savings remains in place, and there is a plan on the table for a beginner-friendly ISA. For portfolio planning, that keeps cash buffers tax efficient while policymakers explore new on-ramps to investing.
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