Isa review expected to start in July – will the Chancellor chop £20,000 limit?

• The Treasury is set to launch a consultation on how to reform the Isa market 

By HELEN KIRRANE

Updated: 12:39 BST, 12 May 2025

Rachel Reeves is set to launch a review of the Isa market within weeks, reports claim. 

The Treasury is preparing to begin a consultation to seek views from across the City of London on how the Isas could be reformed. 

It comes as the Government is looking to encourage savers to funnel more money into stocks and shares Isas instead of holding large sums of cash. 

A radical shakeup of Isas was hinted at in the Treasury’s Spring Statement document. 

At the time, the Government said it wanted to ‘get the balance right between cash and equities to earn better returns for savers’ and ‘boost the culture of retail investment’ 

Reforms suggested included a cut to the current £20,000 allowance for cash Isas, an allowance which is currently shared with stocks and shares versions, with a £4,000 limit speculated in recent months.

The Chancellor’s Mansion House speech in July could be used to launch the consultation, a report from the Financial Times suggests.

Isa overhaul: The Chancellor could launch a consultation into how the Isa market could be reformed in a matter of weeks

Isas have exploded in popularity and there are now over 22million Isa holders. 

Cash Isas are the most widely held of the four main Isa products, which also includes stocks and shares Isas, Lifetime Isas and the Innovative Finance Isa.  

Around £300billion is currently kept in cash Isas and, of this, around £100billion is held by those with £20,000 or more in cash Isa, according to analysis of HMRC figures by stockbroker AJ Bell. 

Savers poured over £4billion into cash Isas in the month of March amid market turmoil resulting from US President Donald Trump’s global tariff war and fears the of cash Isa allowance cuts in the run up to the Spring budget. 

In January, City firms put pressure on the Chancellor to cut tax breaks for cash Isa savers, saying money in cash Isas would generate better returns if it were instead redirected to stocks and shares Isas. 

The rumoured curbing of the cash Isa limit drew criticism from building society bosses, who argued any diminution to cash Isas could potentially lead to a mortgage shortage and a driving up of loan rates.

Despite months of speculation, no changes to the cash Isa allowance materialised in the Spring Statement.  

But the Isa consultation could see one of the biggest shake ups to the Isa market since Isas were launched in 1999. 

Any reforms arising as a result of the Isa consultation could feature in the Chancellor Rachel Reeves’s next Autumn Budget.

A Treasury spokesman said: ‘No decisions have been taken.’

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Isa review expected to start in July – will the Chancellor chop £20,000 limit?

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