Treasury Committee publishes report recommending no cut to Cash ISA limit

The Treasury Committee published a report on the Cash ISA on 25 October 2025, recommending that the Government should not reduce the annual Cash ISA allowance¹. The committee's eleventh report of session 2024-26 follows two evidence sessions with banks and building societies and an earlier inquiry into the Lifetime ISA¹.

The report sets out the current rules: an ISA allows tax-free saving or investing, and the maximum an individual can contribute across all ISAs in a tax year is £20,000¹. Cash ISAs cannot hold shares or funds, and savers receive the interest rate offered by their provider¹. In the 2023-24 tax year, 66% of all ISA subscriptions went to Cash ISAs, and 14.4 million people hold a Cash ISA and no other type of ISA¹. The total saved in Cash ISAs at the end of 2023-24 was £360 billion, with an average value of £26,900 per Cash ISA and an average subscription of almost £7,000 per person that year¹.

The committee examined arguments on both sides. The Financial Conduct Authority's Financial Lives Survey 2024 found that 61% of adults with savings over £10,000 held all or most of their investible assets in cash savings rather than investments, up from 55% in 2020¹. The Investment Association suggested the Government explore different contribution allowances, which "might mean lower limits for Cash ISAs compared to Stocks and Shares ISAs"¹. The Association of Investment Companies' chief executive, Richard Stone, argued for a reduction to £5,000 "at the very least"¹. The Quoted Companies Alliance told the committee there was "approximately £300 billion sitting in Cash ISAs, which are often invested unproductively"¹.

On the other side, more than 50 building societies, trade associations and other financial firms wrote to the Chancellor on 9 July 2025 calling for the current allowance to be maintained¹. The committee cited research from Rathbones Group finding that 19% of retail investors would invest more in the stock market if the allowance were cut, and Hampshire Trust Bank research finding 9% of respondents would move to a Stocks and Shares ISA while 48.5% would contribute to other savings accounts¹. The Investing and Saving Alliance found that "disengagement and a lack of understanding" were the main barriers to investing¹.

The committee also concluded that a reduction would constrain building societies' access to retail savings, which it described as a critical funding source for mortgage lending¹. It recommended that the Treasury prioritise financial inclusion, literacy and awareness, and said any rationalisation of tax-free cash savings might more sensibly begin by examining the case for the tax-free interest allowance¹.

Why it matters for households

The £20,000 annual ISA allowance is unchanged, and the report does not alter any rule. The committee's recommendation is that the Cash ISA limit should not be cut, so savers holding cash ISAs face no change to the amount they can put in tax-free on the basis of this report¹. The report notes that 14.4 million people hold a Cash ISA and no other ISA, and that the average Cash ISA balance was £26,900 at the end of 2023-24¹. It also points to the personal savings allowance, which gives some individuals an additional tax-free allowance on cash savings outside an ISA¹. For anyone weighing cash against investments, the ISA allowance remains £20,000 across all ISA types¹.

What happens next

The Government has two months to respond to the report¹. The committee's recommendations are not binding. The report notes that in its Spring Statement 2025 the Government said it was "looking at options for reforms to ISAs that get the balance right between cash and equities"¹. No decision on the Cash ISA allowance has been announced.