UK Savers Issue Stark Warning to Government Against Cutting Cash ISA Allowance

• 92% want their voices heard as part of any consultation on ISA reform

• Almost 6 in 10 savers currently have no trust in the Government to protect their interests on ISA policy while 37% still have faith

• Moneybox urges Government to take a consumer-first approach to ISA reforms

New research from Moneybox reveals a potential public outcry over any plans to cut the Cash ISA tax-free allowance, as speculation builds ahead of the Chancellor’s Mansion House speech on Tuesday, July 15th.

With a much anticipated consultation into ISA reform expected to be announced, these findings highlight just how fiercely protective Britons are of their Cash ISAs —and how deeply any reduction in the Cash ISA allowance could damage trust in government policy. Far from prompting a shift into investing, the research suggests such a move would ignite frustration, confusion, and disillusionment among savers who see themselves as simply trying to do the right thing.

After months of growing speculation that the Government may slash the Cash ISA allowance to encourage more people to invest,  nearly 6 in 10 (59%) Cash ISA holders say they have no trust at all in the Government to protect the interests of savers when designing ISA policy. 37% of those surveyed have some faith that the Government will keep savers interests at heart when designing ISA policy.

More than half (53%) believe cutting the allowance would further erode trust in government decision-making, while 40% say there is no justifiable reason to reduce the allowance at this time.

Rose, People Ops & Marketing Manager, within 35-44 age bracket: “I think it’s unfair to force people into putting money into stocks and shares just to benefit the stock market. Help working people grow their money in safe, manageable ways and on their own terms. If you want to force stocks and shares ISAs onto people you need to educate them rather than just demanding things from them.”

In the survey of 1,500 Moneybox Cash ISA holders, 92% of respondents were adamant that no changes should be made to long-standing savings products without first consulting the people who use them.

If the Cash ISA tax-free allowance was cut, 62% would be angry because it’s unfair to cautious savers. More than half (54%) would be disappointed, viewing the policy as one that penalises ordinary working people, while 51% said they would be worried or confused about how the change could affect their ability to build financial security.

Brian Byrnes, Head of Personal Finance at Moneybox comments;

“The Cash ISA is a cornerstone of Britain’s savings culture, and our research shows just how highly it’s valued by savers. The tax-free allowance encourages people to save more and has played a vital role in helping individuals build financial resilience. If recent reports are accurate and the Government is choosing to consult before making any changes to the ISA allowance, we believe that’s the right approach — a measured response that reflects both the evidence and public sentiment. We welcome this thoughtful stance on Cash ISA reform and urge continued engagement with savers, providers, and the wider industry.

While we fully support the Government’s ambition to foster a stronger investment culture in the UK, the focus on reducing the Cash ISA allowance as a primary lever is a clear case of the right diagnosis but the wrong prescription. Any ISA reform should aim to strengthen the system as a whole — not force a trade-off between saving and investing, both of which are essential to building long-term financial resilience.”

The case for ISA reform—and specifically for reviewing the Cash ISA tax-free allowance—was based on the view that many Britons are ‘overly reliant on cash’, that the scheme has become a tax shelter for the wealthy, and that reducing the allowance could encourage more people to invest and achieve better long-term returns.

However, Moneybox research reveals how reducing the Cash ISA allowance would be a blunt instrument that risks undermining the very goal of increasing investment.

Lisa, Environmental Health Officer, within 35-44 age bracket: “I’m frustrated as I have only just reached the position of being able to start saving! The money I am now saving is to fund higher education costs for my children when they go to Uni and to hopefully help with a house move in the future to a larger family sized home. Please leave the limit alone! Also, please educate us all about investing and then more people may choose to do this if they want to.”

Over one million people are currently saving and investing through tax-wrapped accounts on the Moneybox platform—many of them on modest incomes. Far from being a tax haven for the wealthy among survey respondents, 64% are currently employed full time and are earning less than £50k. Less than 5% of respondents earn £100k or more. Crucially, it’s also clear that respondents are using the product as intended;  to buy a home (28%), to build a comfortable emergency fund (24%) and to make the most of the interest earned on savings (24%).

It’s also clear from the research that cutting the Cash ISA allowance would not drive people into stock market investing as hoped. 50% of respondents said they would not feel confident investing any surplus savings in the stock market, 44% would instead move surplus savings to a regular savings or current account. Fewer than 1 in 10 (9%) Cash ISA savers who do not hold a Stocks & Shares ISA already, would open one if the  Cash ISA allowance was cut.

Brian Byrnes continued;

 “Cash ISAs are not, and never have been, a blocker to investing—they’re a gateway. Our research shows that while there is an appetite to invest amongst most savers, people are held back by fear of financial loss, lack of confidence and limited knowledge. Rather than cutting tax free saving allowances that motivate and reward positive saving behaviors, the Government should focus on inclusive, considered reforms that support savers on their journey from saving to investing.”

“We are hopeful that the Government will heed the evidence and not move the goalposts on savers doing the right thing to become financially resilient. We remain committed to working with the Government, HM Treasury and peers across the financial sector to ensure consumer needs are kept at the heart of any policy changes.”

Sample of case studies available on request:

• Jonathan, Retired contracts manager, 61+ age bracket; I am opposed to the Government penalising retired folk who are looking for security on their savings to supplement their day to day expenditure.

• Carol, 55-60 age bracket:  I don’t know much about investing and have working extremely hard to be able to save the relatively small amount of money I have. So, I would be reluctant to take the risk of investing. Investments are not guaranteed to increase and I believe that the lack of knowledge with such investments would disadvantage me and others in the market. Don’t penalise those who are trying to save for their future in this way. It’s unfair to compromise the financial welfare for those who are not knowledgeable about investing. It would cause upheaval and risk a negative impact to that welfare for many.

• Thomas, Paraplanner, 25-34 age bracket: Won’t affect me too much as I am young, so I don’t mind opening a stocks and shares ISA, but I wouldn’t be happy if I was approaching retirement and could only put £4k in a Cash ISA now. Let the people decide

• Keelan, Kitchen retail sales designer, 18-24 age bracket: “I feel very worried and angry about this. We are taxed every day on every single product/service we use, I should be able to save some of my hard earned money tax free to help secure a more financially stable and secure future for me and my family. I believe they are using this as a way so more people either spend their cash or invest in the stock market. I may invest in the stock market in the future but I will not invest nearly as much as I do into my cash ISA as it is less safe and not as stable. It would be completely unfair for them to reduce how much cash I can save tax free”

Methodology 

Research was conducted by Stastica on behalf of Moneybox on 9th July 2025.