In a Plum survey of 2,000 UK nationally representative respondents who have opened a Cash ISA, more than two-thirds (68%) think the cap on Cash ISAs should not be reduced from £20,000.

Founder and CEO of Plum, Victor Trokoudes, said:

“In recent weeks, speculation has broken out once again around Rachel Reeves planning to reform Cash ISAs, slashing the £20,000 allowance in half to just £10,000 - a harsh and unwelcome move for many savers across the UK. 

“Our research found that if the Cash ISA allowance was reduced, the most popular alternative option would be to hold this money in a cash savings account (37%), followed by a current account (20%). Less than 1 in 5 (18%) said they would invest in UK stocks and shares. Given the effects of fiscal drag from frozen tax thresholds, which are expected to be extended beyond April 2028 in the forthcoming Budget, more and more people would then be at risk of paying tax on their savings as they exceed their respective savings allowances. It would be especially harsh to punish people for saving in these circumstances, especially given high levels of inflation driven by rising food prices and regulated utility bills. 

“Furthermore, if this move is to encourage more customers to invest to foster growth in the UK, our own customer investing behaviours are telling. Generally, our investors are buying into the AI growth in the US far more than in the UK. Tech Fund (Legal & General Global Technology Trust) and US S&P Total Market funds dominate inflows among Plum customers, making up almost two-thirds (64%) of buy order value in the previous quarter. The S&P Total Market Fund specifically has increased in popularity, from 12% of inflows to 14% between June 2025 and September 2025.”

“The Government’s justification for these changes would seem stronger then if they’re to raise tax revenues rather than support investment in the UK, but that’s not what the Government is saying. In fact, if Reeves’ reported changes do lead to higher levels of investing among ISA users, capital will likely then be transferred from UK banks and building societies, which support lending to British consumers primarily, to US-listed companies so we’d be surprised if that is her intention. That’s why there are also reports that the Chancellor is considering looking at minimum UK shareholding, but this adds further complexity to what many consider an already unnecessarily confusing range of tax wrappers and does not prevent the potential outcome of higher prices for consumers when it comes to mortgages and credit. 

We fundamentally believe in giving people choice over how they make their money work for them and empowering people to build their wealth. While investment in the markets does tend to deliver better returns over time which is why we support the Government’s drive to encourage more investment, we believe the focus should be on incentivising investment rather than penalising savers. This could include extending the Stocks and Shares ISA allowance or introducing a special starter bonus to help people begin their investment journey, as well as simplifying ISAs into a single ISA product. 

“We agree with the Treasury Committee’s recommendation of a comprehensive effort to genuinely improve financial education and establish accessible, high-quality financial advice, as that is more likely to achieve the Government’s aims, as well as a review of the risk warnings to ensure investment risks are positioned properly to avoid deterring consumers overly. In addition, the Government could continue to pursue changes to pension schemes to support investment here in the UK, as the market potential is far bigger than the ISA market and likely to make a more direct impact.”