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A reduction in the £20,000 annual cash Isa limit has been postponed
Chancellor Rachel Reeves is believed to have scrapped plans to cut the UK's cash Isa limit after backlash from building societies and consumer groups.
Speculation has been mounting for weeks over whether the Chancellor will slash the limit from the current £20,000.
However, it is now reported that the focus will instead be on new plans to provide consumers with the information and support they need to invest.
Here Which? explains what was expected to change and what the U-turn means for your savings.
Cash Isa U-turn explained
Rachel Reeves was widely expected to cut the amount of money you can add to a cash Isa per year from £20,000 to as low as £4,000, in a bid to get cash savers investing in the stock market instead.
It was thought that the £20,000 limit would be maintained for stocks and shares Isas.
It is now understood that the Chancellor has scrapped these plans and instead will launch a wider consultation with banks and building societies to find the best way to shift more money to investments.
The Financial Conduct Authority found in May that 61% of people with more than £10,000 in investible assets held these in cash, missing out on higher potential returns from investing.
Earlier this week, the Building Societies Association wrote a letter to the government warning that the rumoured changes could negatively impact the housing market. The group noted that it could reduce funding for lending, drive up mortgage prices and trigger a housing market downturn.
A Treasury spokesperson said: ‘Our ambition is to ensure people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy.’
- Find out more: savings accounts vs cash Isas
What should savers do now?
Given plans to change Isas haven't been scrapped, but instead are subject to consultation, further changes are possible.
These would most likely be announced in the Autumn Budget, which usually takes place in October or November, though an adjusted Isa allowance may not begin until the next tax year in April 2026 or beyond.
However, you may want to look at using up your Isa allowance now, while interest rates on cash Isas remain high.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said savings rates had 'held up impressively' since the Bank of England started cutting interest rates last year. However, as more cuts are expected, rates offered on savings accounts and cash Isas are likely to drop over the coming months.
With Isas, the best rates tend to be offered by the online and app-based providers rather than high street banks.
- Find out more: best cash Isas 2025
Best cash Isa rates
| Provider | Interest rate including introductory bonus (AER) | Provider customer score | Minimum investment | Notice/withdrawals | Opening methods |
|---|---|---|---|---|---|
| Plum Cash Isa | 4.98% (1.69% bonus) | n/a | £1 | No notice – three withdrawals | Mobile app |
| Trading 212 Cash Isa | 4.98% (0.88% bonus)* | n/a | £1 | No notice – unlimited | Mobile app/online |
| Moneybox Cash Isa | 4.65% (0.7% bonus) | 83% | £500 | No notice – three withdrawals | Mobile app/online |
| Tembo | 4.64% | n/a | £10 | No notice – unlimited | Mobile app |
Table notes: *must apply via Moneyfacts to receive bonus. Rates sourced from Moneyfacts on 11 July 2025. Provider customer score Based on savers' overall satisfaction with the brand and how likely they are to recommend it to others. n/a means sample size was too small for us to generate a provider score.
Beware of cash Isa catches
Some of the top-paying cash Isas come with catches.
Plum, Trading 212 and Moneybox all have a temporary bonus rate that's only available for a set amount of time, and only to certain customers.
The bonus rates are offered for 12 months, although it could drop sooner if you make multiple withdrawals or your balance drops below a certain amount.
For example, Plum and Moneybox limit savers to three withdrawals every 12 months. If you make more, your rate drops to 3.29% (Plum) or 0.75% (Moneybox). It also drops to this amount if your balance drops below £500 and £100, respectively.
The bonus rates are also only available for new customers. Additionally, Plum and Trading 212 will not pay the promotional rate if you transfer money in from an existing Isa.
If you don't need immediate access to some of your money, a fixed-rate cash Isa gives you peace of mind for 12 months or more, though upfront rates tend to be lower.
- Find out more: best fixed-rate cash Isas
How to transfer an Isa – and maximise tax savings
You're free to transfer your Isa as often as you like within a single tax year. There are no limits on the number of transfers you can make, whether you're switching to a new provider or moving funds between the same type of Isa. Charges can apply when moving money to a different Isa.
Plus, you can choose to transfer all or just part of your Isa balance, no matter when you originally put the money in. However, not all banks and building societies accept transfers.
To transfer money from one Isa to another, you will need to fill out a transfer form provided by your new Isa provider. You can find this transfer form online. Once you submit this, your new provider will contact your old provider to handle the transfer. The process should be finished within 15 working days.
You should always keep on top of your Isas to maximise your tax savings. For example, if there's an introductory bonus, mark down when it expires. This way, you can consider switching again to ensure you're still getting the best possible deal.
For variable-rate accounts, regularly check your interest rate to make sure it remains competitive.
- Find out more: can you inherit an Isa?
