The money expert highlighted changes to ISA savings limits from 2027, with a key exemption secured for over-65s
Martin Lewis has shared his views on one element of the Budget that ‘isn’t as bad as it could’ve been’. The money-saving guru examined everything that might impact you on his platform, MoneySavingExpert (MSE), alongside a Budget special podcast episode following Wednesday’s announcements.
A crucial detail he emphasised was the forthcoming modifications to cash ISAs from 2027. ISAs are tax-free savings or investment accounts and are available in four types.
These include cash ISAs, stocks and shares ISAs, innovative finance ISAs and lifetime ISAs.
Whilst most savers can presently deposit up to £20,000 each year into one or more ISAs, this is due to alter from 6 April 2027. Instead, contributions will be reduced to merely £12,000 annually for those utilising cash ISAs who are under 65 years of age.
After a recent conversation with Chancellor Rachel Reeves, Martin suggested that this decision forms part of the Government’s strategy to motivate younger individuals to save. Whilst he didn’t entirely support the approach, he is reported as stating on MSE that the alteration ‘isn’t as bad as it could have been’, reports the Mirror.
Speaking on his Budget special podcast, he also noted that there is an unexpected ‘win’ within the information announced. He said: “The win, I think, when I was in with the Chancellor most recently, I came back with an argument that said, ‘You are telling me you’re going to cut the cash ISA limit to £12,000 to encourage young people to invest.
“But the people who have most money in cash ISAs are older people who you are not encouraging to invest, so that is a perverse policy. You’re going to cut their limits and make them pay more tax even though you’re not actually trying to affect them?’ And so I said, ‘You need a carve out,’ and we have the carve out that if you are aged 65 or older, your cash ISA limit will not be cut.”
Whilst this represents positive news for older savers, Martin also highlighted several concerning changes that warrant careful consideration.
MSE stresses that your overall ISA allowance – the total amount you can put away across different ISAs in one tax year – remains at £20,000, regardless of age. Therefore, whilst you’re restricted to depositing £12,000 in a cash ISA, you could allocate an extra £8,000 to a stocks and shares ISA, for instance.
Amongst the various modifications announced yesterday, another affects lifetime ISAs, commonly referred to as ‘LISAs’. These accounts are specifically aimed at those aged 18 to 39, supporting them in reaching their objectives of buying a first property or building retirement savings.
Whilst savers presently benefit from a 25% Government bonus when using funds towards their first home purchase, the scheme’s £450,000 property price cap has stayed unchanged since LISAs were introduced in 2017. This continues despite substantial house price increases over that period.
However, the Government is planning to launch a consultation in early 2026 to discuss the introduction of a ‘new, simpler ISA product to support first-time buyers’ in purchasing their first home. This will replace the current lifetime ISA once it becomes available.
Money Saving Expert (MSE) advises: “As part of this, we understand the Chancellor will look into increasing the LISA property price threshold for existing savers.”
Looking for more from MyLondon? Subscribe to our daily newsletters here for the latest and greatest updates from across London.
