Chancellor John Healey kept the annual tax-free cash ISA limit at £20,000 for all investors in his first Budget on Wednesday 28 October, scrapping a planned cut that would have reduced it to £12,000 for under-65s from April 2027. The previous plan, drawn up by former Chancellor Rachel Reeves, was intended to push savers' money into stocks and shares; Healey's reversal removes that pressure. Moneyfactscompare's Rachel Springall said maintaining the allowance provides welcome certainty for both savers and the industry, and the City of London Corporation welcomed keeping the ISA regime as simple as possible. Treasury Committee chair Dame Meg Hillier called the announcement a victory for common sense.

A planned cut, scrapped

The government will instead explore a new Starter ISA for first-time investors in stocks and shares, working with industry. No launch date or detail for the Starter ISA was in the sources checked, so this article does not invent one. The Budget also raises tax on savings income and property income by 2 percentage points from 6 April 2027, to 24%, 44% and 49% at the basic, higher and additional rates. Reuters reports that rise raising an estimated £590 million in 2031-32, with around half coming from the wealthiest 10% of households.

What changes instead from April 2027

For savers, the practical effect is simple: the £20,000 cash ISA allowance that was due to be cut stays where it is, while the tax treatment of savings income outside ISAs gets less generous from April 2027. Anyone making a decision about where to hold savings should check the Budget document itself and current provider terms, as the Starter ISA remains an idea under exploration, not a product with a launch date.

Sources: Reuters and GOV.UK Budget 2026.