John Healey Plans to Reverse ISA Allowance Cut

Chancellor John Healey is reportedly planning to reverse a decision to reduce the annual Individual Savings Account (ISA) allowance from £20,000 to £12,000 in his inaugural Budget. The original cut, announced by former chancellor Rachel Reeves in last year's autumn Budget, was scheduled to take effect in April 2027 for savers under the age of 65.

Healey reportedly believes that reducing tax-free savings limits is an ineffective tool for promoting equity investment and prefers to focus on saver education instead. While the move has not been formally confirmed, it is expected to be welcomed by retail savings banks and building societies that rely on these deposits for funding.

The decision comes as the banking sector anticipates potential tax increases in Wednesday's Budget. According to HM Revenue & Customs data from September, adult ISAs remain the most popular savings product in the United Kingdom, with subscriptions reaching £135.7 billion during the 2024-25 tax year.