Finance
UK to cut tax-free cash savings allowance in November budget, Telegraph says
Published by Global Banking & Finance Review®
Posted on October 25, 2025
2 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on October 25, 2025
2 min readLast updated: January 21, 2026
The UK plans to halve the tax-free cash ISA savings limit in the upcoming budget. This move aims to encourage share ownership but faces opposition from the Treasury Committee.
LONDON (Reuters) -Britain's government is likely to halve the amount of cash that people can put in tax-free savings accounts at next month's budget, the Telegraph newspaper reported on Saturday, citing a government minister who said tax incentives needed rebalancing.
Under existing rules, Britons can save up to 20,000 pounds ($26,842) a year in cash, shares, bonds or investment funds in individual savings accounts, known as ISAs, where the money is not liable for tax on interest, dividends or capital gains.
Around a third of Britons have an ISA, with about 726 billion pounds saved in total. Most ISAs are used only for cash savings and rarely use the full 20,000-pound annual allowance.
Britain's Labour government said in March that it wanted to promote wider share ownership and provide greater support for companies with listings in London, and that reducing the tax benefits for cash savings was one method under consideration.
In a report published on Saturday, the British parliament's Treasury Committee urged the government not to reduce the cash ISA limit, saying it would not boost share ownership and instead could reduce the supply of mortgages.
Building societies often use cash ISAs as a way of raising funds to provide mortgages to home-buyers.
The parliamentary committee report said a lack of financial education, not tax incentives, was the main reason few Britons invested in shares outside of workplace pension schemes.
The Telegraph said a decision had been made to reduce how much cash can be saved in an ISA, requiring people to invest in shares to benefit from the full tax-free allowance.
"We are looking at the right balance between cash and shares in the ISA. The bottom line is we want people to be better off and one way we can do that is to build a shareholding democracy in this country," the Telegraph quoted financial services minister Lucy Rigby as saying.
The newspaper said a final decision on how much to reduce the cash ISA limit had not been reached, but halving it to 10,000 pounds a year, or a slightly higher limit, were the most likely options.
($1 = 0.7451 pounds)
(Reporting by David Milliken; Editing by Aidan Lewis)
A tax-free savings account allows individuals to save money without paying taxes on the interest earned. In the UK, these accounts are known as Individual Savings Accounts (ISAs).
An ISA, or Individual Savings Account, is a type of savings account in the UK that allows individuals to save or invest money without paying tax on the interest, dividends, or capital gains.
The cash ISA limit is the maximum amount individuals can deposit into a cash ISA in a tax year. Currently, this limit is set at £20,000, but it may be reduced in upcoming budgets.
Share ownership refers to holding shares or stocks in a company, which represents a claim on part of the company’s assets and earnings. It allows individuals to participate in the company's growth and profits.
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