BSA publishes Budget submission warning against Cash ISA limit cuts

The Building Societies Association has warned the Treasury that reducing the annual Cash ISA limit would be counterproductive to the Chancellor's aim of building a stronger investment culture, in a Budget submission published on 16 October 2025¹.

The BSA said a cut in the annual Cash ISA limit from £20,000 to £5,000 could lead to 17,000 fewer mortgage loans and reduce GDP by around £7 billion over five years¹. It argued that reducing Cash ISA limits would not encourage more people to invest, but would instead penalise responsible savers, restrict flexibility and risk pushing up the cost of mortgages¹. The submission states that Cash ISAs are not idle money, describing them as meeting practical needs by helping people build financial resilience, save for a house deposit or manage finances in retirement, and as supplying funding for mortgages and other lending¹.

Andrew Gall, Head of Savings at the BSA, said:

"We are very concerned that the Chancellor is still considering cuts to the Cash ISA limits."

Building Societies Association, source¹

He added that cutting the limit would undermine one of Britain's most successful savings products and a stepping stone that has helped millions to build financial resilience and confidence to invest¹.

The BSA represents all 42 UK building societies, plus 2 mutual-owned banks and 7 credit unions¹. It says building societies and mutual-owned banks have total assets of almost £650 billion, hold residential mortgages of over £485 billion, or 29% of the total outstanding in the UK, and hold over £485 billion of retail deposits, 23% of all such deposits¹. The association states that building societies and mutual-owned banks account for 47% of all cash ISA balances, employ around 52,300 full and part-time staff and operate through approximately 1,300 branches, a 30% share of branches across the UK¹.

Measure	Figure given by the BSA
Proposed cut in annual Cash ISA limit	From £20,000 to £5,000¹
Estimated effect on mortgage loans	17,000 fewer¹
Estimated effect on GDP over five years	Around £7 billion lower¹
Share of cash ISA balances held by building societies and mutual-owned banks	47%¹

The Treasury has not been reported as responding to the submission, and no decision on the Cash ISA limit has been reported. The submission concerns the annual ISA allowance ahead of the Autumn Budget.

Why it matters for households

The BSA's submission is a response to the possibility that the Chancellor could reduce how much can be paid into a Cash ISA each year. The limit currently stands at £20,000 across ISAs, and the BSA's figures address a specific proposal to cut the Cash ISA element to £5,000¹. No such change has been announced.

If a cut were made, the practical effect for savers would be a smaller annual amount that could be sheltered from tax in cash, with any further cash saving held in a taxable account or directed towards investments. The BSA argues this would restrict flexibility for people saving for a deposit or holding cash in retirement¹. Its estimate of 17,000 fewer mortgage loans implies a knock-on effect for borrowers, since building societies and mutual-owned banks fund a large share of UK mortgage lending and hold 47% of cash ISA balances¹. The difference between a Cash ISA and an ordinary savings account is the tax treatment of the interest, which is what a lower limit would reduce.

What happens next

The submission was published on 16 October 2025, ahead of the Autumn Budget¹. The date of the Budget and any decision on Cash ISA limits have not been reported in the submission. The BSA has published its full Budget submission and called on the Chancellor to listen to savers who rely on Cash ISAs¹.

Sources1 cited