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

Andrew Prosser, head of investments at InvestEngine, said: “Since Labour came to power, it’s felt like Groundhog Day for ISAs – constant speculation about lifetime caps, Cash ISA cuts and mandatory UK investing has denied savers the stability they need.

“It’s good to finally have some clarity, including on cutting the Cash ISA allowance to £12,000. But if the goal is to push more people to invest via ISAs, it’s doubtful this will work.

“Simply reducing the allowance won’t build a stronger retail investment culture – many will simply opt to keep savings outside the ISA wrapper and risk paying more tax on interest as a result, hurting their long-term finances.

“More welcome is the Chancellor’s decision to drop plans for a UK equity allocation for investments via ISAs.

“Having previously scrapped Tory plans for a ‘British ISA’ on grounds it would add complexity, it was surprising to see this idea essentially revived.

“Again, the policy was ill-considered. UK equities already make up a healthy share of ISA portfolios and investors shouldn’t be forced to buy patriotically or prop up UK PLC.

“Instead, we should empower people to invest based on their own financial goals.

“Ultimately, today’s ISA decisions do not go far enough to boost retail investing.

“Rather than tinkering with allowances and equity mandates, the focus should be on improving understanding and giving people the tools to make confident, informed choices.

“Simplifying the ISA system by allowing cash and investments in one account and providing greater support for financial education should have featured in this year’s Budget.

“Their absence was a missed opportunity to meaningfully strengthen the UK’s investing culture and improve financial outcomes for potentially millions of people.”