‘Sucker punch’ for savers as annual Cash Isa limit to be cut to £12,000

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “We need an investment culture in the UK.

“The Chancellor’s calculation that investing instead of saving in an ISA could have left you £50,000 better off demonstrates the huge growth potential offered by investment.

“However, it remains to be seen whether the cut to the Cash ISA will have the impact the Treasury is hoping for.

“There will be people for whom Cash ISAs are the most sensible home for their money, especially if they’re saving for the short term, have significant sums of cash and are a higher earner, so they won’t want to move into investment.

“There will be those who should be investing instead, but the gamechanger here will be changes in the pipeline to allow businesses to provide more targeted support and give people the help they need to take advantage of the enormous growth potential of investment.

“It’s the carrot that’s going to be effective here: not the stick.

“The fact this change isn’t happening overnight does give people time to take advantage of their Cash ISA allowance ahead of April 2027. It’s still important not to let the tax tail wag the dog.

“How much you pay into ISAs, and the balance of cash and stocks and shares, will depend on your own circumstances.

“However, if it makes sense to open a Cash ISA, and you have the money and allowance available, it’s worth acting sooner rather than later, while there are still strong rates around.

“The Lifetime ISA has provided an essential boost for hard-pressed young buyers, desperate to get into the property ladder.

“It has also proved a valuable way for people to save for retirement, especially self-employed people, who fall seriously short when it comes to pension contributions.

“The right consultation on its replacement is vital, and needs to ensure that dedicated savers and investors, who have been putting money away for their first property or for retirement aren’t disadvantaged by any change.”