A key point he highlighted was the upcoming changes to cash ISAs from 2027
Martin Lewis has delved into his thoughts on one aspect of the Budget that ‘isn’t as bad as it could’ve been’. The financial expert covered everything that could affect you on his website, MoneySavingExpert (MSE), along with a Budget special podcast episode following the announcements on Wednesday.
A key point he highlighted was the upcoming changes to cash ISAs from 2027. ISAs are specifically savings or investment accounts on which you never pay tax and come in four forms. This includes cash ISAs, stocks and shares ISAs, innovative finance ISAs and lifetime ISAs.
Although most savers can currently add up to £20,000 annually to one or more ISAs, this is set to change from April 6, 2027. Instead, contributions will be slashed to just £12,000 per year for anyone using specifically cash ISAs under 65 years old.
Following a recent discussion with Chancellor Rachel Reeves, Martin claimed that this move is part of the Government’s initiative to encourage younger people to save. While he didn’t completely agree with the angle, he is quoted as saying on MSE that the change ‘isn’t as bad as it could have been’.
Talking on his Budget special podcast, he also added that there is a surprising ‘win’ amongst the information delivered, too. 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.”
It’s crucial to note that this isn’t quite the full picture, with Martin also outlining several ‘bad’ changes for savers, but it’s still arguably worth considering.
MSE also emphasises that your total ISA allowance – the maximum you can contribute across various ISAs in a single tax year – will stay at £20,000, no matter your age. So, although you are limited to saving £12,000 in a cash ISA, you could also have an additional £8,000 in a stocks & shares ISA, for example.
Among the various changes highlighted yesterday, another concerns lifetime ISAs, also known as ‘LISAs’. These savings accounts are primarily designed for people aged 18 to 39, helping them achieve their goals of purchasing a first home or saving for retirement.
Although savers currently receive a 25% Government boost when they use funds to buy their first home, the scheme’s £450,000 property price limit has remained frozen since LISAs launched in 2017. This persists despite significant property price rises since then.
However, the Government is now set to publish a consultation in early 2026 to discuss the implementation of a ‘new, simpler ISA product to support first-time buyers’ in buying a new home. Once available, this will be offered in place of a lifetime ISA.
Advice from MSE adds: “As part of this, we understand the Chancellor will look into increasing the LISA property price threshold for existing savers.”
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