Reducing the Cash ISA limit won’t increase appetite to invest in UK companies

UK IFAs: Reducing the Cash ISA limit won’t increase appetite to invest in UK companies

The theory that reducing how much UK savers can put into their Cash ISAs every year will encourage greater demand to invest in UK companies is flawed, according to Flagstone’s final pre-Budget poll of UK financial advisers*.

Key findings

• Two thirds (68%) of advisers say reducing the Cash ISA limit won’t encourage more investment in UK equities

• Almost half (47%) say stubborn inflation, employer’s NI, and the threat of further tax hikes will prevent the sort of growth their clients would need to see in UK equities to make investment in them worthwhile

• Only 20% say they’re seeing more UK equities that are undervalued and attractively priced

• And a third (32%) say they have not recommended UK-focused funds to clients for 3+ years

Flagstone’s poll goes on to explore what advisers think clients will do instead of investing in UK equities:

• 68% expect clients to move excess cash after reaching a reduced Cash ISA threshold to general savings accounts

• A third (31%) expect clients will explore non-ISA investment products

Claire Jones, Head of Strategic Relationships and New Business at Flagstone, comments: “Our research, drawn from some of the finest financial planning and advice minds in the country, lays bare a significant issue with the idea that decreasing the Cash ISA limit will increase appetite among savers to take investment risk. The data suggests that this idea is too simplistic and ignores significant macro-environment challenges that make investment less appealing to a large demographic.

“The expectation that more clients will move more cash to general savings accounts corresponds with what we’re hearing from our adviser-partners. Making sure that clients understand the compelling risk-adjusted returns they can enjoy from a proactive cash management strategy looks set to become a larger part of many advisers’ day-to-day.”

Advisers that responded to the poll were also forthcoming in their views on the fairness of a decision to reduce the Cash ISA limit:

• Almost half (46%) fear a reduced Cash ISA limit could discourage good savings habits and behaviours

• 30% believe a lower limit would be unfair on savers who rely on ISAs for flexibility and security

Jones continues: “Inertia continues to weigh heavily on the UK savings market. An enormous proportion of people’s savings are earning little to nothing at all. All efforts to encourage people to do more, not less, with the money are essential. At Flagstone, we truly fear that reductions to the Cash ISA limit may do more harm than good to the country’s saving behaviours and habits.”

* Survey of 103 UK financial advisers by Flagstone, November 2025