The cash ISA limit will be cut from £20,000 to £12,000 from April 2027, Chancellor Rachel Reeves announced in the Autumn Budget.

While the overall ISA contribution allowance will remain at £20,000 per year, Reeves told Parliament that the £8,000 cut from the cash ISA limit will be available for investments in stocks and shares ISAs.

However, the £20,000 cash ISA limit will be retained after this date for those aged 65 and over.

The move comes after the personal finance market has been divided ahead of the Budget as to whether the cash ISA limit should be cut, with Scottish Friendly stating that a reduction makes a "strong case" for increasing household investments, while AJ Bell said that the Government should "go back to the drawing board" on ISA reforms.

Following the Budget announcement, chief savings officer at Nottingham Building Society, Harriet Guevera, described the move as a "sucker punch for savers" and disappointing for lenders.

She stated: "We support the Government’s aim to boost an investing culture in the UK, but restricting choice is not the way to do it.

"At a time when financial confidence is already fragile, cutting the allowance sends a difficult message to households who are trying to do the right thing."

Furthermore, Aegon has questioned whether restricting the cash ISA limit will turn savers into investors.

Pensions director at Aegon, Steven Cameron, added: "Time will tell if this blunt intervention will deliver on its intended purpose of turning those with more cash savings than they need in the short term into investors.

"We agree that many customers may not have the best balance between cash savings and stocks and shares investments. Those saving up to £20,000 each year into a cash ISA are losing out on the potential to benefit from the greater growth prospects of stocks and shares investments.

"But rather than the ‘stick’ of a new lower limit, we would have preferred more use of the ‘carrot’ of more guidance on savings versus investments."

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