CONFIRMED: Healey reverses cuts to cash ISA allowances

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82184266#Comment_82184266

Yes, just 16% of taxpayers, according to the chancellor, and by definition it's those with the most (unwrapped) savings, i.e. "the broadest shoulders", so not difficult to justify politically:

This is a fair and proportionate approach, and 84% of income tax payers will be unaffected by these changes. This also raises revenue in a progressive way, so that those who earn more contribute more. Around half of the revenue raised from this change is expected to come from the top 10% of households.

Edit: data sources mentioned:

84% of taxpayers are unaffected by these changes in 2027-28. These impacts have been derived from HMRC’s 2023-24 Survey of Personal Incomes data, projected to 2027-28 in line with economic assumptions consistent with the Office for Budget Responsibility October 2026 ‘Economic and Fiscal Outlook’, then mapped onto household income deciles using HM Treasury’s Distributional Analysis model. The figures are based on individuals’ tax liabilities, and do not represent actual tax receipts received by HMRC.

SnowMan

https://www.gov.uk/government/publications/budget-2026-document

2.52…..The government will now go further, working with the investment industry to explore a new ISA
incentive for people investing in a stocks and shares ISA for the first time. The detailed design will be developed with industry.

friolento

The extra 2% will result in relatively modest extra income

Seems a bit vindictive, but then they estimate it will only affect 3.8 million savers - around 5.5% of the UK population. So it's probably lots of extra-tiny fiddles for those affected (like myself) …..

AndyTh_2

Is any more of Reeve's ISA changes being reversed or just the allowance? Budget document is inconclusive.

I'd really like the other ISA to Cash ISA transfers to be allowed for de-risking (though I know about that £0.01 of equities/bonds/gilts makes MMFs tax free in S&S ISA bit)

slinger2

https://forums.moneysavingexpert.com/discussion/comment/82184266#Comment_82184266

From a recent Paragon blog

"And this is becoming far more common – more than 4.5 million people are forecast to pay tax on savings interest in 2026/27, compared with 1.2 million just four years earlier¹. 

Basic-rate taxpayers will see the sharpest rise this tax year, from 475,000 to more than two million, with an average liability of £804. Around 1.5 million higher-rate and 682,000 additional-rate taxpayers are also expected to be affected."

So only 4.5 million people.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82184302#Comment_82184302

My understanding was that all of the stuff about transfer restrictions and cashlike investments was being proposed specifically because of the reduction in cash ISA annual allowance for under-65s, so I'd have thought that they'd all be binned, but happy to be corrected…

Swipe

https://forums.moneysavingexpert.com/discussion/comment/82184311#Comment_82184311

https://www.moneysavingexpert.com/news/2026/10/cash-isa-limit-cut-cancelled/

Investment ISA circumvention rules have ALSO been scrapped
In June 2026, the former Government also laid out a series of planned changes designed to stop people using investment ISAs as a workaround to hold cash. These included a 22% charge on interest earned from cash held in stocks and shares ISA, and a ban on transfers from non-cash ISAs to cash ISAs for under-65s.

However, the Government has confirmed today that these measures will NOT go ahead as planned.

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82184278#Comment_82184278

I'm surprised it's as much at 16%! £1000 PSA, £5000 starting rate, £20,000 ISA allowance, £50k premium bonds, seems there's a lot of people with a massive mountain of cash! Gilts may become more popular - maybe that's the plan, drive down govt borrowing costs!

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82184511#Comment_82184511

Yes, and by International standards these different ways to earn significant amounts of interest without paying tax, are very generous by International standards. Your average German or Irishman and many other nationalities can only look with envy at such large tax breaks for savings interest.

Pat38493

Does this mean they are also scrapping the proposed flat rate tax on proceeds from cash held in S&S ISA?

Edit: and the proposed rule that you can’t transfer money from an S&S ISA to a cash ISA?