The Chancellor’s plan to reduce the annual tax-free Cash ISA allowance from £20,000 to £12,000 for those under 65 has prompted experts to share their top tips for protecting your savings
Alex Sitaras, head of savings and partnership products at Skipton Building Society, has offered his top tips for savers trying to navigate Rachel Reeves‘ plan to cut the annual tax-free Cash ISA allowance from £20,000 to £12,000 for those under 65. A quick survey of 563 Cash ISA holders commissioned by the building society revealed that 67% have responded negatively to the Chancellor’s announcement.
Three-quarters believe the Government should be promoting saving, not restricting it. While 73% said the move diminishes the advantage of having a Cash ISA altogether, and 53% feel it is unfair on those who have planned their finances around the existing £20,000 cap.
Almost half anticipate they will need to reconsider their savings habits as a result of the budget announcement, with some predicting they’ll shift money into investments or contribute more to workplace pensions.
Interestingly, 53% expect to max out the new £12,000 allowance once introduced in 2027. While an additional 23% already regularly max out the £20,000 cap.
To help make the most of the ISA before any changes, Alex recommends act quickly and fully utilise this year’s £20,00 allowance.
Another key first piece of advice he has for savers is to consider diversifying across ISA types as they can still maximise the overall annual ISA limit, which remains unchanged at £20,000, by splitting it across both Cash ISAs and Stocks & Shares ISAs. He said this can also help spread risk while keeping as much money protected from tax as possible.
He also reminded savers not to neglect the Personal Savings Allowance, where basic-rate taxpayers can earn up to £1,000 in interest tax-free annually. Based on a 4% interest rate, a basic-rate taxpayer can save £25,000 before paying any tax, although this allowance decreases for higher-rate taxpayers.
He suggested that some savers might want to consider Premium Bonds, which allow you to hold up to £50,000 tax-free through monthly prize draws – though they operate differently to traditional interest-earning accounts as returns are based on luck rather than guaranteed interest.
Those with children might want to explore intergenerational wealth transfer with Junior ISAs. Savers can deposit an additional £9,000 per child each year tax-free, although this money legally becomes the child’s and can be accessed at 18.
The expert from Skipton Building Society, which provides free money advice through its My Money Reviews service, said: “Slashing the cap so sharply means many more people under 65 will end up paying tax on savings that were previously protected, so making the right moves now is vital.
“Stocks and Shares ISAs can be a brilliant way to grow wealth tax-efficiently, but only when they genuinely support someone’s long-term goals. These changes are a useful nudge for savers to start thinking about investing, yet they won’t – and shouldn’t – drive decisions on their own.
“What matters most is choosing the right approach for your circumstances, whether that’s cash, investments, or a blend of both.”
Over half (52%) believe it will be important to get financial advice to help them navigate the changes, with 41% likely to seek advice to find the best way to maximise returns.
Four in 10 would do so to prevent errors that could eat into their savings, and 30% want help understanding what the reduced allowance means for their long-term goals.
Alex added: “Today’s announcement has understandably rattled a lot of Cash ISA savers, particularly those under 65. People who’ve worked hard to build a financial buffer are suddenly unsure what the changes mean for them, and whether they need to rethink their entire savings strategy.
“What we’re hearing already is a mix of frustration, confusion and, for some, real concern about making the wrong move. But there are still plenty of smart, tax-efficient options available – the key is understanding which ones genuinely fit your goals.
“Whenever allowances change, it can feel like the rules of the game have shifted overnight. That’s why taking a moment to step back, reassess, and get clear on the basics can make a huge difference.
“The good news is no one has to figure this out alone – we offer expert, regulated financial advice tailored to people’s needs – and it’s available to everyone, not just our members.”