A cross-party group of senior MPs has urged Chancellor Rachel Reeves not to reduce the annual cash ISA allowance in the upcoming Budget, warning that such a move would harm savers and mortgage lenders. The Treasury Committee said it is “not the right time” to cut the £20,000 tax-free limit, as reports suggest the government may halve it to £10,000 to encourage investment in UK stocks.
Committee chair Dame Meg Hillier cautioned that lowering the allowance would fail to achieve the chancellor’s aim of shifting savers toward equities. The committee’s report argued that the government should instead focus on improving financial literacy so citizens can make better-informed decisions with their money. “This is not the right time to cut the cash ISA limit,” Hillier said. “Without financial education and confidence, the chancellor’s attempts to transform the UK’s investment culture will hit savers and mortgage borrowers instead.”
MPs also warned that reducing the allowance could hurt building societies, which rely heavily on retail deposits for mortgage lending. Such a policy, they said, risks undermining financial stability and the competitiveness of lenders. Industry experts, including Tom Selby of AJ Bell, echoed the committee’s concerns, calling the move “clumsy and ineffective.” He argued that simplifying ISA rules, rather than restricting them, would better encourage long-term investing.
Chancellor Reeves responded by saying she will consider all options in the November Budget, emphasizing the need to balance saving incentives with investment growth. “We want people to get better returns on their savings and pensions,” she said, “but changes must be made in the right context.”