Savers rushed to deposit money into cash ISAs in October, driven by speculation that the annual allowance might be cut. £4.2 bn was added in October – a 75% increase from September’s £2.4 bn.
Of course, the allowance cut speculation did become reality. In the Budget, Chancellor Rachel Reeves confirmed the allowance will drop from £20,000 to £12,000 from April 2027, but only for people under 65. Savers aged 65 and over will continue to have access to the full £20,000 tax-free allowance.
HMRC wants to prevent savers from parking cash in a stocks & shares ISA purely to avoid this lower limit, so they are considering introducing a 20% levy on interest earned on cash held in such ISAs.
