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Chancellor Cuts ISA Allowance, Freezes Tax Thresholds Until 2031

12/2/2025

Summary

Story summary

Chancellor Rachel Reeves's Budget reduces the cash ISA tax-free allowance from £20,000 to £12,000.
The plan also freezes income tax thresholds until 2031, increasing potential tax bills for savers.
Analysts estimate that about 15% of cash ISA holders may pay taxes on interest earned outside ISAs, affecting roughly two million of the 13.3 million holders.
Experts suggest shifting excess savings into stocks and shares ISAs to mitigate the tax implications.

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Story summary

Chancellor Rachel Reeves's Budget reduces the cash ISA tax-free allowance from £20,000 to £12,000.
The plan also freezes income tax thresholds until 2031, increasing potential tax bills for savers.
Analysts estimate that about 15% of cash ISA holders may pay taxes on interest earned outside ISAs, affecting roughly two million of the 13.3 million holders.
Experts suggest shifting excess savings into stocks and shares ISAs to mitigate the tax implications.