Two in five Cash ISA savers say cut to allowance won’t encourage investing

Two fifths (40 per cent) of Cash ISA savers said the impending cut to the Cash ISA allowance will make no difference in encouraging people to invest, new research from AJ Bell has shown.

The investment platform found that a further fifth (19 per cent) believe the changes will actively discourage people from investing, while a quarter (24 per cent) said people will be more likely to invest.

From April 2027, the Cash ISA allowance for under-65s will reduce from £20,000 to £12,000 – although the overall ISA allowance is remaining at £20,000, with the other £8,000 allowance to be used for a Stocks and Shares ISA.

AJ Bell, which surveyed 2,000 UK adults for its research, reported that 38 per cent of all Brits, not just Cash ISA account holders, believe these changes will make the ISA landscape more complex and confusing.

One third (33 per cent) also suggested that such stringent measures could deter them from using Stocks and Shares ISAs at all.

Head of public policy at AJ Bell, Rachel Vahey, said that the research lays bare the “huge potential miscalculation by the Government”, echoing concerns expressed across the retail investing industry.

“Two in five Cash ISA holders said the changes would make no difference to the behaviour of savers when it comes to making that first step to invest for the long term, with an additional fifth believing they will actively deter people from investing,” Vahey commented.

“Although the Chancellor might be keen to point to those who believe the changes will achieve the government’s stated aims, this cohort makes up just 24% overall – far from a vindication of the policy among cash savers.

“It illustrates the new rules will introduce massive complexity for virtually no benefit, with the number of people put off investing cancelling out those who think it might nudge them from saving to investing. And all of this after Labour said before the general election it wanted to simplify the ISA landscape.”

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