The Autumn Budget announcement is always a big day in the UK’s financial calendar, and this year was no exception. In the hours leading up to the Chancellor’s speech, there was plenty of speculation-fuelled even more by a last-minute leak from the Office for Budget Responsibility (OBR) about the details of the budget. Social media buzzed, news outlets scrambled to interpret the hints, and many people wondered what surprises might be in store. 

As the Chancellor took to the dispatch box just after lunchtime, the country tuned in to hear what would change for the years ahead. 

There was a lot announced in the budget, which we covered in a deep dive here, but here is a snippet of one of the key topics.

 

Cash ISA changes

What is it?

A Cash ISA is a savings account where the interest you earn is tax-free. There’s a yearly limit on how much you can put in across all your ISAs.

What changes are coming to the way you save?

Before the Budget, you could save up to £20,000 each tax year in ISAs, and the full amount could go into a Cash ISA if you wished, as long as you were over 16.

From April 2027, the annual limit for Cash ISAs will be reduced to £12,000 for savers under 65. The overall ISA limit (£20,000) stays the same, but only those aged 65 and over can put the full £20,000 into a Cash ISA. A younger saver can still use the rest of their allowance in other types of ISAs (like Stocks & Shares or Lifetime ISAs).

What’s the impact?

If you’re under 65 and have been putting the full £20,000 into a Cash ISA each year, from April 2027 you’ll only be able to put in £12,000. You can still save up to £20,000 a year tax-free, but you’ll need to use other types of ISAs (like Stocks & Shares) for the rest. If you’re 65 or over, nothing changes—you can still put the full £20,000 into a Cash ISA. And for Junior ISAs, the allowance remains the same.

The Government’s stated aim is to encourage younger savers to consider investing for the long term, as investing in equities has historically provided higher returns than cash savings (though this comes with risk, and past performance isn’t a guarantee of future results).

However, while Cash ISAs are simple and familiar, it’s not clear that changing the allowance will actually shift people’s behaviour towards investing. Many people can already earn interest on ordinary savings accounts outside an ISA; basic rate taxpayers can receive up to £1,000 in interest tax-free each year. At a 4% interest rate, that’s equivalent to having £25,000 in savings before paying any tax on the interest. There are also other tax-free options like Premium Bonds, though these don’t guarantee a set return.

In our view, rather than adjusting allowances, it would be more helpful to focus on financial education—helping people understand the differences between cash savings and investing, and how to plan for their financial future.

 

What Should You Do Now?

For most people, this Budget doesn’t require urgent action or a change of course. If you’ve been waiting for clarity before making financial decisions, you can continue with your plans. However, it’s important to recognise that, while there are few immediate changes, the impact of frozen allowances and future tax rises will build up over time.

For most, the best approach is to stay on track, keep your plans under review, and be aware of how gradual changes may affect you in the years ahead.

 

Need Advice?

With so many moving parts and individual circumstances, we believe in the value of independent, ongoing financial planning. If you don’t already have regular reviews, or if you’re unsure how these changes might affect you, please get in touch for a personal review. For clients who already benefit from our ongoing service, we’ll be happy to discuss the details and implications at your next annual review.

Remember: The best financial decisions are made with up-to-date, factual information and tailored advice. If you have questions or want to discuss your financial plan, we’re here to help.

 

Disclaimer

This summary is provided for general information purposes only and does not constitute personal financial advice, a recommendation, or guidance to make any financial decisions. The content is based on information available at the time of writing, including official Government announcements and reputable sources. Some measures discussed may be subject to further consultation, may not be implemented immediately, or could change as legislation develops.

Tax rules, allowances, and rates are subject to change and may vary depending on your individual circumstances and where you live in the UK. The impact of any changes will differ from person to person. You should not make financial decisions based solely on this summary. We strongly recommend seeking personalised, independent advice before taking any action in response to Budget announcements.

Past performance is not a reliable indicator of future results. The value of investments and the income from them can go down as well as up, and you may not get back the amount you invest.