Chancellor Rachel Reeves is preparing to cap the tax-free cash ISA allowance at £12,000 in the Autumn Budget, according to multiple reports, in a move aimed at pushing more savings into investments while keeping the overall ISA limit at £20,000.
Reeves lines up £12,000 cash ISA cap
Chancellor Rachel Reeves is expected to announce a cut to the annual cash ISA limit from £20,000 to £12,000 in the Autumn Budget on November 26, 2025. The plan has been reported by the Financial Times, which cites people involved in Budget preparations.
According to these reports, the £12,000 ceiling would apply only to cash ISAs. Savers would still be able to use the full £20,000 annual allowance by putting the remaining £8,000 into stocks and shares or other ISA types. The Treasury has declined to comment on the leak, and no draft legislation or policy paper has yet been published.
How the current ISA rules work
Official guidance and HMRC statistics show that adults can currently subscribe up to £20,000 each tax year across all ISAs, and the full amount can sit in cash if they choose. The £20,000 overall limit is set out in HMRC’s Annual Savings Statistics collection and ISA rules on GOV.UK.
Government data published in September 2025 shows a clear tilt toward cash. HMRC figures, summarised by outlets such as Corporate Adviser and Trustnet, indicate that cash ISA subscriptions rose sharply in 2023–24, with around twice as many cash ISA accounts as stocks and shares ISAs and tens of billions more flowing into cash.
A separate analysis from MoneyWeek puts total cash ISA holdings at about £360 billion in the 2023–24 tax year, underlining why any change to the cash allowance is politically sensitive.
Push for investment meets resistance from MPs and industry
Reeves’ team sees the reform as part of a wider push to channel more savings into UK companies and the London stock market. The FT reports that earlier ideas, including a voluntary “Brit ISA” with a minimum UK equity allocation, have been dropped after strong opposition from providers and the Investment Association.
That investment push runs against a growing body of criticism. A recent Treasury Committee report on cash ISAs concluded that cutting the cash allowance is unlikely to move many savers into stocks and shares and could instead leave them paying more tax on interest.
The report notes that cash ISAs accounted for about two thirds of ISA subscriptions in 2023–24 and remain the most widely used type of ISA. The same report highlights evidence from building societies that rely on cash ISA balances to fund lending.
Industry reaction is split. Hargreaves Lansdown says reviving cash ISA cuts after an earlier abandoned £10,000 proposal risks confusing savers and undermining a trusted product, while some investment firms quoted by MoneyWeek argue that a lower cash cap could encourage more long term investing.
What a £12,000 cash cap could mean for savers
HMRC participation data suggests most ISA users do not put £20,000 into cash each year, so a £12,000 cap would mainly bite higher balance savers who regularly use the full allowance. Those savers would need to decide whether to hold extra money in taxable accounts, rely on the personal savings allowance, or move more into investment ISAs.
For many households, the key effect may be added complexity. A system where the overall ISA allowance stays at £20,000 but cash is capped at £12,000, possibly with tighter rules on transfers between cash and investment ISAs, could be harder to follow and may deter people from engaging with ISAs at all.
Until Reeves delivers the Budget and HM Treasury publishes the detailed documents, the rules for the 2025–26 tax year remain unchanged: adults can put up to £20,000 into ISAs, including the full amount in cash, and existing balances stay tax free under long standing ISA protections. Savers weighing large deposits before April should base their decisions on confirmed allowances and, where needed, seek regulated financial advice tailored to their own position.
