Over half of cash ISA savers aged under 65 plan to max out the £20,000 allowance before the new cap comes into effect next April.
A survey by Paragon Bank of over 1,100 active cash ISA savers aged under 65 found that 52% strongly agreed they would utilise their full allowance before it is cut to £12,000 in 2027 and are reluctant to move away from cash savings once the allowance is reduced.
Almost half (46%) of respondents said they would divert savings into a non-ISA account once the cash ISA limit is lowered. Just over a quarter (29%) said they would invest into a stocks and shares ISA, while 16% said they would use premium bonds and 15% plan to increase pension contributions.
In direct contradiction to the Government’s push to encourage an investing culture in the UK, 62% of people said they would be unlikely to invest in a stocks and shares ISA instead of cash. The vast majority (72%) have concerns around the risk of losing money, while 62% expressed worries around market volatility and 40% are concerned about fees and charges.
One in three (30%) also cited a lack of knowledge and complexity (21%) as key barriers to investing.
Paragon Bank said the overwhelming majority (89%) of those surveyed believe the cash ISA limit should remain at its current level. Half of those surveyed say they feel disappointed by the change, while 22% say they were frustrated. In contrast, just 10% said they were accepting of the change and fewer than 1% said they felt positive about it.
The preference for cash remains strong, with 83% preferring the security of cash savings, even if returns are lower. More than half (53%) admit they find investing intimidating, which encourages them to stick with traditional savings products.
The leading reasons for saving into a cash ISA are retirement (48%), general savings (38%) and building financial security (34%).
Andrew Wright, head of savings at Paragon Bank, said the research highlights how strongly under-65s value the certainty and tax efficiency of cash ISAs.
“For many, these products play a central role in long‑term financial planning, whether that’s building security, saving for retirement or simply protecting hard‑earned returns from tax. The strength of feeling around the planned reduction in the cash ISA allowance highlights a clear disconnect between the planned changes to the cash ISA threshold and saver preferences.
“While there is an assumption that people will shift into investing, our findings show even active ISA users remain uncomfortable with the risks involved and prefer the safety of cash, even if returns are lower.”
Wright added: “With so many planning to maximise their allowance before 2027, it’s clear that cash ISAs continue to meet a real and widespread need, and that cutting the limit risks pushing more savers into taxable accounts rather than encouraging greater engagement with investment products.”
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