The Government has reaffirmed its decision to cut the cash ISA allowance for under-65s in response to concerns raised by the Treasury Committee.
In the Autumn Budget 2025, the Government announced that the annual ISA allowance will be reduced from £20,000 to £12,000 for under-65s from April 2027.
However, the announcement prompted concern from the Treasury Committee. In a report published last October, the Committee warned that cutting the allowance would be unlikely to incentivise people to invest their savings in stocks and shares. It said that instead, the Treasury should prioritise measures to promote financial inclusion, literacy and awareness, as well as improve access to advice and guidance.
Responding to the concerns raised, economic secretary to the Treasury Lucy Rigby said the Government was committed to encouraging more people to invest.
Rigby said the Department for Education plan to reform the programmes of study for maths and citizenship which will help to strengthen pupils’ foundational understanding of financial education at an early age.
Rigby also noted that the introduction of targeted support will enable firms to proactively suggest products or courses of action to people, which could include supporting people with excess cash savings to consider investing for the first time, such as through a stocks and shares ISA.
Rigby said: “The Government wants to see more people benefit from the higher returns and long-term financial resilience that investing can provide. That is why the Chancellor has set out a series of bold measures to get Britain investing again, including the reforms to ISAs made at Budget.”
However, chair of the Treasury Committee, Dame Meg Hillier, continued to express scepticism in a response published on Wednesday.
“The Treasury’s ambition is commendable, but I remain to be convinced that these reforms will drive the cultural change that Ministers want to see.
“In her proposed changes, the Chancellor risks complicating the ISA landscape and confusing consumers. It is now clear where the Government stands on the issue. The next step is to see how this complex product will be delivered in the real world,” she said.
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