Budget 2025: What do the announced changes mean for ISAs?

The Budget confirmed that the Cash ISA allowance is set to be cut from April 2027. 

For under-65s, the Cash ISA allowance will reduce from £20,000 to £12,000. For 65s, and older, the Cash ISA allowance will remain at £20,000. The Stocks and Shares ISA allowance, too, will remain at £20,000, as will the combined ISA allowance (so you could hold £12,000 in cash plus £8,000 in stocks and shares).  

The policy objective here is clear: the government wants to encourage people to invest rather than hold their money in cash, framed in the context of driving UK economic growth. 

As the changes aren’t due to take effect until April 2027, there’s no immediate action required if you’re an employer offering workplace ISAs, or simply an ISA saver  

However, it’s worth noting that the devil is in the detail, and we’re still waiting for the finer points on how these changes will be implemented. HMRC has confirmed that the industry will be consulted on draft legislation to amend ISA regulations, and this legislation will appear before Parliament well ahead of the April 2027 implementation date. 

At NatWest Cushon, we don’t offer a Cash ISA but we do have a Stocks and Shares ISA which allows savers to hold cash within it. The Stocks and Shares ISA allowance remains unchanged at £20,000. 

While employees can still hold cash within a Stocks and Shares ISA, there’s been talk that ‘cash-like’ investments (such as currencies) held within Stocks and Shares ISAs could potentially be affected by these changes, or taxed. We’re awaiting full details from the government on exactly how this will work, and we’ll keep you posted as soon as we know more. 

While not in the Chancellor’s main statement, the government has announced a consultation on the LISA, with language suggesting the product could be replaced by a new first-time-buyer ISA. We’re expecting the consultation to launch sometime in 2026. 

Our view? The LISA remains a fundamentally good product, but it needs updating and simplifying. We’ve continually lobbied for changes like scrapping the withdrawal penalty and removing the house-price cap. We’ll be making sure employers’ and savers’ voices are heard during the consultation process.