Brand Logo Moneyfacts Group plc
Telephone Icon T: 01603 476476 Email Icon E: enquiries@moneyfacts.co.uk LinkedIn Icon

Cash ISA reforms must be considered carefully

Image of Moneyfacts.co.uk Brand Logo Image of Moneyfacts.co.uk Brand Logo Image of Moneyfacts.co.uk Brand Logo
Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert 01603 476210 Email Rachel
04/07/2025

Cash ISA reforms must be considered carefully

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Cash ISAs remain a popular choice for savers and those impacted by fiscal drag and want to protect their hard-earned cash from tax. Numerous debates on what can be done to improve the culture of investing in the UK has led to speculation for cash ISAs to take a hit. However, there will be many savers who just do not want to invest their cash on the stock market, so any reforms must be considered carefully.

“Slashing the cash ISA allowance could also raise mortgage costs, with various mutuals making it clear how vital cash ISAs are as a source of funding, which will cause chaos in the housing market. Clearly, there will be consequences if any cut to the cash ISA allowance has not been thought out thoroughly.

“One way that the Government could encourage saving in a stocks and shares ISA would be to offer a short-term Government bonus for investing in UK stocks, like they do to entice savers to take out a Lifetime ISA. However, to attract savers to UK stocks there could be reductions on management fees for investing in UK funds.

“Ultimately the Government has a goal to stimulate growth, but they must not penalise savers who have no desire to invest. It’s vital that they tread carefully with any reforms and ensure they review the financial education surrounding investing to protect consumers. If they were to launch a campaign to encourage investing, people must be conscious of the benefits but also the risks. Many savers are fearful of stocks plunging and losing a portion of their original investment, but if they invest for the longer-term its often the case that stocks can perform better than the returns earned on a simple cash ISA.

“Labour introduced ISA’s over 25 years ago and the aim was to encourage people to save or invest their money, free from tax. Should the Government review how tax could work on individuals with big ISA pots, the money earned from tax could then be spent on other initiatives, such as the Help to Save scheme. However, many retail banking institutions have objected to changes, saying a fall in limits could impact their ability to issue mortgages and other loans. Although, there was a time where the cash ISA limit was much less, but of course that was over a decade ago.

“Millions of consumers are expected to pay higher-rate tax at 40% this tax-year, so those who unexpectedly breach their Personal Savings Allowance (PSA), which allows basic rate taxpayers to take home up to £1,000 worth of savings interest tax-free each year but only £500 for higher rate taxpayers.”

 

Cash ISA reforms must be considered carefully

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Cash ISAs remain a popular choice for savers and those impacted by fiscal drag and want to protect their hard-earned cash from tax. Numerous debates on what can be done to improve the culture of investing in the UK has led to speculation for cash ISAs to take a hit. However, there will be many savers who just do not want to invest their cash on the stock market, so any reforms must be considered carefully.

“Slashing the cash ISA allowance could also raise mortgage costs, with various mutuals making it clear how vital cash ISAs are as a source of funding, which will cause chaos in the housing market. Clearly, there will be consequences if any cut to the cash ISA allowance has not been thought out thoroughly.

“One way that the Government could encourage saving in a stocks and shares ISA would be to offer a short-term Government bonus for investing in UK stocks, like they do to entice savers to take out a Lifetime ISA. However, to attract savers to UK stocks there could be reductions on management fees for investing in UK funds.

“Ultimately the Government has a goal to stimulate growth, but they must not penalise savers who have no desire to invest. It’s vital that they tread carefully with any reforms and ensure they review the financial education surrounding investing to protect consumers. If they were to launch a campaign to encourage investing, people must be conscious of the benefits but also the risks. Many savers are fearful of stocks plunging and losing a portion of their original investment, but if they invest for the longer-term its often the case that stocks can perform better than the returns earned on a simple cash ISA.

“Labour introduced ISA’s over 25 years ago and the aim was to encourage people to save or invest their money, free from tax. Should the Government review how tax could work on individuals with big ISA pots, the money earned from tax could then be spent on other initiatives, such as the Help to Save scheme. However, many retail banking institutions have objected to changes, saying a fall in limits could impact their ability to issue mortgages and other loans. Although, there was a time where the cash ISA limit was much less, but of course that was over a decade ago.

“Millions of consumers are expected to pay higher-rate tax at 40% this tax-year, so those who unexpectedly breach their Personal Savings Allowance (PSA), which allows basic rate taxpayers to take home up to £1,000 worth of savings interest tax-free each year but only £500 for higher rate taxpayers.”

 

Notes to editors

You are welcome to use part or all of this press release, so long as we are sufficiently sourced. We would appreciate a link back to Moneyfactscompare.co.uk.

Pioneering financial comparison technology for over 35 years, Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, banking, life, pension and investment products in the UK.

Moneyfactscompare.co.uk is the financial product price comparison site, launched as Moneyfacts.co.uk in 2000 and rebranded to Moneyfactscompare.co.uk in 2023, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfactscompare.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

You are welcome to use part or all of this press release, so long as we are sufficiently sourced. We would appreciate a link back to Moneyfactscompare.co.uk.

Pioneering financial comparison technology for over 35 years, Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, banking, life, pension and investment products in the UK.

Moneyfactscompare.co.uk is the financial product price comparison site, launched as Moneyfacts.co.uk in 2000 and rebranded to Moneyfactscompare.co.uk in 2023, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfactscompare.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Contact Us If you're looking for extra comment, a chart or more information, then please give us a call. We are always more than happy to help.
Adam French Head of News & Communications
Rachel Springall Press Officer / Finance Expert
Caitlyn Eastell Press & PR Executive