Just how much cash will you be able to hold in your ISA from next year and what will it cost you to do so? At first sight, new rules for individual savings accounts (ISAs) due to come into force from 6 April 2027 look straightforward. In practice, they are likely to prove anything but, thanks to tricky new regulations published this week.

The confusion stems from changes announced in last November's Budget. Chancellor Rachel Reeves stressed her determination to use the tax system to encourage risk-taking investment into UK companies and infrastructure; she therefore announced that from the 2027-2028 tax year onwards, the annual limit on investments into cash ISAs – where your money is simply held in a risk-free bank or building society account – will fall to £12,000. By contrast, the annual stocks and shares ISA allowance – where your money flows through into productive investments – will remain at the full £20,000.

So far, so good. But what about cash held in a stocks and shares ISA? You're also entitled to hold cash in these accounts. Perhaps you're concerned about market volatility, or think you might need to make a withdrawal soon; maybe you just want to maintain a small cash balance to fund fees and investment charges; you may even have opted to take dividends from existing holdings in cash, potentially to be invested later on.

Moreover, what about cash-like investments in a stocks and shares ISA? Opting for a money-market fund, say, is akin to holding your ISA savings in cash, even if you're technically making an investment.

Reeves's new ISA changes will affect everyone

These complexities have prompted some head-scratching at the Treasury, which delayed publication of the detailed regulation on how the new rules will apply to stocks and shares ISAs until earlier this week. Now, however, it has published an “anti-circumvention rules fact sheet” that is more demanding than many had expected. Most strikingly, the Treasury plans to introduce a new tax on interest earned on cash held in a stocks and shares ISA, even though the tax-free nature of money held in such accounts is meant to be sacrosanct. A 22% tax charge will apply, in line with the rate of savings interest tax, from April 2027 onwards.

While a similar arrangement operated in the UK until 2014, some ISA providers believe the change will fundamentally undermine the tax efficiency of ISAs. Providers will no longer be able to describe all ISAs as tax-free in order to encourage savers and investors, they say. Some ISAs will be more tax-free than others.

The Treasury has also confirmed plans to restrict savers from holding cash-like investments in their stocks and shares ISA. Money-market funds will not qualify for ISAs if they account for the entirety of the investor's stocks and shares ISA portfolio; ISA managers and platforms will then be forced to intervene.

There will also be a veto on transfers of money into a cash ISA from holdings in a stocks and shares or innovative ISA, which is currently allowed. Again, while the goal is to stop investors getting round the new rules, one result will be to limit financial planning and constrain the flexibility of investment strategies.

This will affect everyone. In last November's Budget, the Treasury said savers and investors aged 65 or over would be exempt from the lower annual allowance on cash ISAs, maintaining their full £20,000. The thinking is that older people are often in a phase of running down their savings and may therefore need to take a more risk-averse approach to managing their money. This week, however, the Treasury revealed that the over-65s won't be exempt from the ban on investing an entire stocks and shares ISA in money-market funds, or from the moratorium on transfers to cash ISAs.

All of which adds a great deal of complexity to the ISA rules – and plenty of scope for adverse outcomes for investors. Plus, ISA providers themselves will muddy the waters. JPMorgan Personal Investing, for example, has already announced that, from this week onwards, it will no longer pay interest on cash held in a stocks and shares ISA if an investor's entire pot is held in cash. The move is in line with the intent of the Treasury's thinking, but will naturally save JPMorgan Investing some money. And previously, the Financial Conduct Authority has warned the whole ISA industry about paying poor interest rates on cash held in a stocks and shares ISA.

Elsewhere, ISA providers – including leading online platforms – are already beginning to rethink their policies on what they will and won't allow investors to do. They will want to get ahead of restrictions and may simply withdraw certain products and services completely. Maybe they'll no longer allow investors to receive cash dividends, for example, requiring everyone to use accumulation funds.

Will Reeves stay chancellor long enough?

All of which is a reminder of how strongly the law of unintended consequences applies in the world of tax. The desire of the Treasury to shift money out of cash ISAs into stocks and shares accounts that are seen as more supportive of economic growth is understandable – the most recent official statistics reveal investors put £69.5bn into the former in the 2023-2024 tax year against only £31.1bn in the latter. But more doubt and complexity may simply put people off, reducing the size of the whole pie.

There's one final unknown, meanwhile. This scheme is the brainchild of Rachel Reeves and her team. But will she remain chancellor long enough to finalise the remaining details – a short technical consultation will take place between now and the autumn – let alone to see it come into operation next April? Maybe a different chancellor will want to do something completely different.

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Investors will face a charge on any interest paid on cash in a stocks and shares ISA, the Treasury has confirmed in its latest guidance on ISA reforms.

Plans are underway to reduce the cash ISA allowance to £12,000 per year from April 2027 for savers under age 65.

The Treasury is also disincentivising holding uninvested cash in a stocks and shares ISA and restricting how much can be held in cash-style products within this type of ISA.

It has confirmed plans for a 22% charge on any interest or alternative finance return paid on cash held within a non-cash ISA, from April 2027. This may be money that account holders haven’t invested yet or from dividends paid out.

But in some good news for investors, money market funds will be allowed in a stocks and shares ISA as long as they do not make up 100% of the investments.

Common investments held in stocks and shares ISAs such as individual shares, funds, investment trusts, exchange-traded funds and corporate and government bonds, including UK gilts, will not be treated as cash-like assets, the Treasury said.

James Carter, head of platform policy at Fidelity International, said: “We are pleased to see that cash-like investments will remain eligible for non-cash ISAs.

“These products are genuine investment products, holding short-term government and high-quality debt, and form a valued part of many balanced portfolios. Removing them from the stocks and shares ISA framework would have undermined the government’s objective of encouraging more people to invest, by giving customers a cliff edge choice between staying in cash or moving directly into higher-risk, more complex products.”

New restrictions on transfers into cash ISAs

Transfers from stocks and shares ISAs into cash ISAs will not be permitted but it will be allowed the other way round.

Individuals aged 65 and over will still benefit from a higher cash ISA limit of £20,000 per year, if they wish to use the full annual ISA allowance for that type of account.

The transfer restriction will be stopped from this point but the charge on interest earned on cash in a stocks and shares ISA and the prohibition on 100% cash-like investments will remain in place.

A technical consultation is due to be released by the Treasury on how the charge will work.

Greg Davies, head of behavioural finance at Oxford Risk, has already warned that the measure risks backfiring.

He said: “Getting people invested is an inherently behavioural challenge. You do not encourage nervous savers into investing by making the first step feel more complicated, more punitive and harder to reverse.

“People move from cash into markets when the journey feels clear, safe enough, and matched to their goals, time horizon and financial circumstances. Adding tax charges and transfer restrictions to an already confusing ISA system sends precisely the wrong behavioural signal.

“For many would-be investors, this will not create confident investors. It will create more hesitation, more disengagement, and more people doing nothing.”

Rachel Vahey, head of public policy for AJ Bell, warned that the changes are “increasingly complex” and “riddled with unintended consequences” and may mean people just keep money in cash ISAs instead.

She said: “The new rules mean a charge of 22% will be applied to interest paid on cash in investment ISAs. This is a flat rate charge, meaning the same rate applies whether the ISA account holder is a basic rate taxpayer, higher rate taxpayer, or indeed doesn’t pay any income tax.

“The ISA holder cannot invest 100% of their (non-cash) investment portfolio in money market funds, or that would be classed as a ‘non-qualifying’ investment. This means they could invest 99% in money market funds and 1% in, say, UK equities and that would be allowed.

“It also means they could hold 50% of their portfolio in cash, but if the remaining 50% was held in money market funds that wouldn’t be allowed. Whereas if they held 49% in money market funds and 1% in UK equities, this would be permitted under the rules.”

Will investment platforms stop paying interest on cash?

Several investment platforms such as Bestinvest, AJ Bell, interactive investor, Fidelity and Hargreaves Lansdown pay interest on cash held within a stocks and shares ISA.

The rates are not that competitive but the benefit for investors is that they can get cash in the wrapper or receive dividends and decide how they want to invest it.

It is currently unclear if platforms will stop paying interest or if investors will just need to be aware of the charge.

Carter said: “We have consistently welcomed the government’s recent focus on encouraging more people to invest, supporting better long-term outcomes. Recent initiatives such as a review of risk warnings, the introduction of a targeted support regime, and an education campaign on the benefits of investing, will all help to reset the approach to risk and bridge the gap between precautionary cash savings and long-term investment.

“We look forward to the publication of the technical consultation which will include further details required to enable providers to implement these changes.”

A spokesperson for AJ Bell was unable to comment on whether the platform will stop paying interest on cash.

Jason Hollands, managing director of Bestinvest, described the anti-circumvention measures as a "disproportionate response to a problem that may never meaningfully materialise."

He added: "Investors will also need to weigh up the relative difference in returns on a money market fund minus any platform fees, versus holding cash and having the 22% charge deducted."

MoneyWeek has asked Hargreaves Lansdown and interactive investor for comment.

The Treasury has revealed plans for a revamped Lifetime ISA (LISA) product that will remove the upper age limit and withdrawal charges but the retirement savings component will also disappear.

Chancellor Rachel Reeves revealed in her 2025 Autumn Budget that the government would launch a consultation on a “new, simpler ISA product to support first-time buyers to buy a home” in “early” 2026.

A consultation released by the Treasury this week said there is evidence that the current product is “not working well for many".

The LISA was launched in 2017, aimed at first-time buyers and pension savers.

Under current rules, you can put up to £4,000 a year into a Lifetime ISA and the government adds 25%, up to a maximum of £1,000 per year. This allowance is included within the overall £20,000 annual ISA allowance.

The money can be used either to contribute towards a deposit on a property worth up to £450,000, or to save the money and withdraw it fee-free once you reach 60 years old.

Critics suggest the price cap and age limits as well as the 25% withdrawal charge for "unauthorised" withdrawals make the Lifetime ISA unattractive.

The Treasury consultation acknowledges this and highlights that the number of unauthorised withdrawal charges is increasing year on year, reaching 8% of all accounts opened in 2024/25.

The document also warns that the LISA "may be diverting people from saving into pension products that may be a more appropriate for them".

The Treasury said: “The government is committed to making the aspiration of home ownership a reality for as many households as possible. However, we recognise that the LISA is not working for everyone, and that when people’s circumstances change, they should be able to adjust their finances accordingly.

“We understand that the complexity of the LISA may have dissuaded many providers from offering it, and savers from taking it up, meaning that it is not as accessible as it could be. That is why we are consulting on the implementation of a new, simpler, ISA product to support first-time buyers.”

The government is now seeking views on a replacement product called the First Time Buyer ISA (FTB ISA).

How would the First Time Buyer ISA work?

The new First Time Buyer ISA (FTB ISA) will solely be for the purposes of buying a first home.

The self-employed who can't access auto-enrolment would need to stick with a LISA or focus on a private pension or self-invested personal pension to save for retirement.

Similar to the LISA, there would be cash and stocks and shares options, money saved into the account would go towards your annual ISA allowance and there would be a government bonus, although the level hasn't been announced.

Accounts can only be open from age 18 and there would be no upper age limit.

Subscription limits, property price caps and the level of the government bonus will be announced at a future fiscal event to take account of market conditions and wider public finance context, the Treasury said.

The document added: “Increases to any of these parameters in isolation would come with a cost. A lower subscription limit and/or property price cap could allow for a higher government bonus and would shift the benefits towards lower income savers outside London and the South East.”

There isn't a launch date yet for the product but the Treasury said it would like it to be available "as soon as practically possible".

What is the difference between the First Time Buyer ISA and the Lifetime ISA?

There are a few differences between the FTB ISA and the LISA, including it only being available to first-time buyers.

Unlike the LISA, which has to be opened by age 40 and the bonus can only be earned until age 50, there will be no upper age limit.

The government bonus will be paid as a percentage of subscriptions made, rather than the value of the account, at the point that an individual withdraws funds to purchase their first home.

This means that the bonus is calculated on what an individual has put into the account, minus any withdrawals made, not on any investment growth or savings interest accrued subsequently.

Under the current system, providers pay the government bonus in a LISA each month, when a contribution has been made in the previous month. For example, if you deposit £1,000 in one month, a 25% bonus (£250) would be added in the following month.

But the new FTB ISA bonus will be paid at the point an individual makes a withdrawal for purchasing their first home.

The Treasury said this removes the need for a withdrawal charge and means a saver can withdraw funds, should their circumstances change, without penalty.

Rachael Griffin, tax and financial planning expert at Quilter, said: “Thousands of savers have been charged for accessing their LISA for an unauthorised withdrawal, often because their financial circumstances changed unexpectedly and they needed to dip into their savings. Allowing people to access their money when needed, while still being incentivised to save towards a deposit for a first home, would be a much better design.

“Equally important is the decision to remove the upper age limit. The average age of a first-time buyer has been consistently on the rise, yet the Lifetime ISA effectively shut the door on those who did not get onto the property ladder prior to turning 40. A reformed product with no age limit would reflect a more modern housing market.”

Rachel Vahey, head of public policy at AJ Bell, said moving away from an upfront bonus should make the system simpler but she has warned that savers will lose out on the investment growth they could have earned on the bonus while building up their deposit.

She highlighted that someone paying in £4,000 each year for five years into a Lifetime ISA with a bonus added each year would have built up £28,165 assuming 4% growth net of charges. Under the FTB ISA, assuming the same terms including payments, and that a government bonus of 25% is added when buying the house, the ISA holder would only have built up £27,532.

Vahey added: “For some first-time buyers, that could mean having less money available when they come to purchase a home.”

Who can use the FTB ISA?

The FTB ISA will be available to UK residents over age 18 looking to purchase their first home.

It can only be used with a mortgage, which excludes cash buyers and you will need to have the account open for at least 12 months to become eligible for the bonus.

What will happen to the Lifetime ISA?  

There is no suggestion currently that the LISA will be phased out so accounts can still be opened and used.

Individuals with funds in a LISA will not be able to transfer their money to the new FTB product as they will have already received the government bonus.

But you will be able to use any funds in your existing LISA and those in the new FTB ISA for the same purchase.

Individuals will be able to hold both the new FTB ISA and an existing LISA, but will only be able to save into one in the same tax year.

Regardless of where the property price cap is set, the FTB ISA, LISA and Help to Buy ISA cap will be aligned so that no account holders will lose out, the Treasury said.

To ensure that holders of the Help to Buy ISA do not lose out, the Treasury is also proposing that holders will be able to transfer their holdings into the new FTB product up to the subscription limits.

Additionally, as part of wider ISA reforms, transfers from a stocks and shares ISA to the new cash FTB ISA will be banned.

Paula Higgins, chief executive of the HomeOwners Alliance, said this is “well-intentioned reform” but warned that unless the property price cap is reviewed, it risks fixing one unfairness while leaving another firmly in place.

She said: “The Treasury should update the cap now and future-proof the scheme by ensuring it rises in line with house prices, rather than allowing it to become outdated again.

“First-time buyers need a product designed for the housing market of the future, not one based on prices from nearly a decade ago.”

NS&I has increased the rates on nine of its savings accounts as it looks to draw in customers and meet its financing target.

The Treasury-backed bank increased rates on one, two, three and five-year fixed bonds and a green savings bond today (23 June).

The rise in the fixed bonds comes as NS&I looks to meet its net financing target for the 2026/27 financial year of £15 billion, up from £13 billion in 2025/26.

The financing target is set by the government, which can influence what rates NS&I offers on its accounts. If the target is higher, NS&I may raise interest rates.

It is the third time NS&I has hiked interest rates on the one, two, three and five-year fixed-rate bonds in 2026.

Sarah Coles, head of personal finance at investment platform AJ Bell, said: “The savings market is impressively competitive right now, and NS&I has entered the fray.

“Banks are pulling out all the stops to compete, keeping fixed rate deals higher and forcing NS&I to raise rates again to attract the cash it needs.”

Which NS&I accounts will pay more?

The interest rates have been raised on the following nine accounts:

Credit: NS&I

You can open one of the eight Guaranteed Growth or Income bonds with a minimum investment of £500 and save a maximum of £1 million.

You can open the Green Savings Bonds with a minimum £100 investment and hold a maximum of £100,000.

You cannot withdraw funds early as all nine accounts are fixed-term while you also cannot access the money until the end of the term.

After the accounts mature, you can withdraw any cash or reinvest it into a new NS&I account.

You can apply for the accounts on the NS&I website.

How do NS&I's savings accounts compare to others on the market?

While the boost in rates is good news for savers, there are slightly better options if you want to get the top rate.

The better deals are with smaller providers, but they are protected by the Financial Services Compensation Scheme (FSCS).

Customers can get a 4.81% interest rate with StreamBank on its one-year bond, as well as 4.8% with Afin Bank.

In terms of two-year fixed-rate deals, Market Harborough Building Society is offering a 4.86% interest rate on its two-year bond while Afin Bank is offering a two-year bond paying 4.85% interest.

Afin Bank is also offering the most competitive rate on three-year fixed-rate bonds (4.85%) while thisbank has a three-year fixed bond paying 4.82% in interest.

Meanwhile, Afin Bank’s five-year fixed-term bond pays 4.9% interest while Atom Bank has a five-year fixed bond paying 4.85%.

NS&I’s Green Savings Bond has shot up the rankings and is now the joint-second best green savings account on the market, according to Moneyfacts, beaten only by Castle Trust Bank’s three-year e-Saver account paying 4.54% interest.

Coles said the significant hike to the rate on the Green Savings Bond suggested “the previous policy of hoping green-conscious savers would be happier to overlook a much lower rate for the bonds just wasn’t working in attracting the cash” NS&I wanted.

Santander has launched a market-leading regular savings account which pays an interest rate of 8%.

The account is open to new and existing customers with a qualifying Santander current account, including: Santander Everyday, Edge, Edge Student, Edge Up and Explorer.

The Everyday and Edge Student current accounts are fee-free while the other three charge up to £17 a month.

You must be 16 or over and live in the UK to apply for the regular saver.

Customers can open Santander’s regular saver with just £1 and save up to a maximum of £200 every month.

The 8% interest rate includes a 5% bonus for the first 12 months. After 12 months, it falls to 3%. The interest rate is variable meaning it could go up or down at any point.

Money can be withdrawn from the account anytime penalty-free.

Jessica Sheldon, MoneyWeek's deputy digital editor, added: "While an 8% interest rate is certainly eye-catching, restrictions on monthly contributions mean savers might not end up with as much interest as they think they would with a regular savings account, so it’s worth considering whether it’s the best option for you.”

“It’s a good idea to regularly check the best rates for savings accounts, and set a reminder to review the account once a bonus rate period ends.”

How does Santander’s regular savings account compare to the rest of the market?

When it comes to headline interest rate, Santander’s regular savings account pays the most on the market as of 23 June.

The next best account in terms of rate is Zopa’s regular saver paying 7.1% interest, followed by The Co-operative Bank’s regular saver paying 7%.

However, you could earn more interest with The Co-operative Bank’s regular saver as it lets you add £250 into the account each month.

Assuming you added the maximum £200 into the Santander regular saver each month, didn’t withdraw any money and the interest rate stayed the same, you could earn £104 in interest over the course of a year.

But, if you paid the maximum £250 per month into The Co-operative Bank’s regular saver, you could earn £114 over the year, assuming no withdrawals or changes to the interest rate.

Is a regular savings account the best option for you?

Regular savings accounts may not be as attractive as they seem, as the headline interest rate only applies to money that is saved for a whole year – meaning the first month’s deposit.

The second month’s deposit is only in the account for 11 months of that year, so you only earn eleven twelfths of the interest rate.

Therefore, on average, you’re effectively getting half the headline rate advertised.

This means, if you already have a lump sum, you could get more interest by putting the money into an easy-access or fixed rate savings account instead.

For example, you would get £104 in interest by drip-feeding £2,400 into Santander’s regular savings account over 12 months, based on no withdrawals being made and the interest rate remaining at 8%.

However, if you added a lump sum of £2,400 into the top-paying easy-access savings account, currently Chase which pays 4.5%, at the end of the year you would have earned £110 in interest.

Two savers have woken up millionaires after NS&I confirmed the winners of June’s Premium Bonds prize draw.

The first person to get £1 million is from Leeds and won with the bond number 662EK268242. They bought the winning bond in February 2026 and have £42,425 in Premium Bonds.

The second person to win the top prize is from Cheshire and West Chester, purchasing their winning bond of 573GA618329 in March 2024. They have a total holding of £33,800.

It is the fifth time someone from Leeds has won the top £1 million prize and the second time someone from Cheshire and West Chester has bagged the jackpot.

Both this month’s £1 million prize winners will have received a knock on the door by Agent Million, an anonymous NS&I employee that travels the country to inform jackpot winners of their newfound wealth.

While June’s jackpot winners have already been announced, Premium Bonds holders can find out they’ve won smaller prizes from 2 June.

How many prizes will be issued in June’s monthly draw?

Just under six million tax-free prizes will be paid to Premium Bonds prize draw winners worth a total of £376,627,975 in June.

This month, there were 136,955,621,672 £1 Bonds eligible for the draw.

While just two people won £1 million in June, 71 £100,000 prizes will be paid out, as well as 143 payments of £50,000. Over 2.8 million prizes worth £25 will be awarded.

The table below shows the breakdown of Premium Bonds prizes in June:

Credit: NS&I

How to check if you’ve won in June’s prize draw

NS&I’s Agent Million will inform the Premium Bonds prize draw jackpot winners of their win in person.

NS&I says bond holders can check if they have won prizes ranging from £25 to £100,000 the day after the first working day of each month. You can check using the Premium Bonds prize checker app, by visiting the NS&I website or by asking Alexa. For June 2026, Premium Bonds holders can check from 2 June.

The prize checker app and website will show you prizes you’ve won that month, anything you’ve won in the previous six draws and any older prizes you haven’t claimed yet. Just make sure you’ve got your bond or NS&I number to hand so you can access your account.

As Premium Bonds do not expire, it may be worth checking if you have any prizes waiting for you even if you bought them years ago.

NS&I says over 99% of prizes have been paid to winners since draws began in 1957, but there are still millions of unclaimed Premium Bonds prizes.

For example, there is a £25,000 prize from June 2023 yet to be claimed in Cheshire & West Chester.

We look at the alternatives to Premium Bonds in a separate piece.

Investment platforms are starting to stop paying interest on uninvested cash.

It comes ahead of the changes to ISA rules from April 2027.

Chancellor Rachel Reeves used her 2025 Autumn Budget to reveal new restrictions on cash ISAs in an attempt to encourage more people to invest rather than keeping their money in cash.

From April 2027, under-65s will only be able to put up to £12,000 into a cash ISA each tax year, down from the current £20,000 that can be used across the tax wrapper. They will still have the overall £20,000 annual ISA allowance, so if they put £12,000 into a cash ISA, the remaining £8,000 could go into a stocks and shares ISA.

Transfers from stocks and shares ISAs to cash ISAs will also be banned as part of the changes.

Plus, HMRC has said it will introduce a charge for those earning interest on cash within a stocks and shares ISA.

The aim is to disincentivise investors from keeping cash holdings in a stocks and shares ISA for a long time and instead encourage them to put the money back into the market.

For now, many of the major investment platforms are still paying interest on uninvested cash.

But J.P Morgan Personal Investing appears to be getting its investors ready for the changes now.

Cash pot changes

It may be tempting to keep money in cash while you decide where to invest, especially if you are earning some interest.

But the Treasury wants to get more people investing, ideally in UK stocks, so the new charge aims to provide a disincentive as it could outweigh any interest earned.

HMRC is due to consult on the changes.

While not explicitly linked to the reforms, J.P Morgan Personal Investing has unveiled plans to remove the interest paid on cash-only pots.

Currently, the robo-wealth manager pays the Bank of England base rate minus 2.5% on its cash-only pots.

This is money that investors can use to drip-feed funds into their portfolio or to protect your balance from market movements ahead of a withdrawal.

It is separate to cash held in the investment pot that goes towards management fees. Interest on this cash is currently paid at the base rate minus 0.75%.

But from 22 June, J.P Morgan said cash-only pots will no longer accrue interest.

Instead, cash‑only pots will remain available for holding cash and drip feeding money.

Any interest accrued up to but not including 22 June 2026 will be paid into your pot at the end of the current quarter.

Interest will still be paid on cash held in your investment pot.

Can you still earn interest on uninvested cash in a stocks and shares ISA?

Most other investment platforms are still paying interest on cash for now.

BestInvest pays a relatively decent 2.98% interest on cash holdings within any of your investment accounts.

Its managing director Jason Hollands said there are no plans yet to change the way cash is treated in its stocks and shares ISA, while HMRC has yet to firm up its plans.

In contrast, AJ Bell’s stocks and shares ISAs, lifetime ISAs, and junior ISAs pay 1.75% interest on all cash balances.

The interest paid can also depend on the amount being held.

For ISAs and junior ISAs, interactive investor now pays 1.11% on the first £20,000, 1.26% on the value between £20,000 and £50,000, 1.36% between £50,000 and £100,000, and 2.21% on the value above £100,000.

Hargreaves Lansdown users can earn 1.51% on cash balances between £0 and £19,999, 1.18% between £20,000 and £99,999, 2.02% between £100,000 and £999,999, and 2.38% on balances worth £1 million and higher.

MoneyWeek has asked the major platforms what there plans are once a charge is introduced.

NS&I has laid out a timeline of when tens of thousands of bereaved families will be reunited with lost savings.

The government-backed savings bank acknowledged in March that an “operational failure” had led it to lose track of hundreds of millions of pounds’ worth of deceased customers’ money.

Now, it has shared further details of how affected families will be contacted about money being returned.

It was originally estimated around 37,500 bereavement claims totalling £476 million in value had been affected by the operational error.

However, NS&I has confirmed that, as of 19 May, it is in fact 34,000 estates who are missing out on £367 million. The savings bank said this number could reduce further.

Sir Jim Harra, interim chief executive of the NS&I, said: “This issue should not have happened and I want to repeat the apology NS&I made in March to everyone who has been affected by it. Beginning the process of repaying these funds is a key step in putting things right.

“Dealing with the death of a loved one is a difficult and upsetting time. We know we need to do all we can to make the process of accessing a deceased saver’s NS&I holdings as straightforward as possible for personal representatives and executors of estates.”

How will affected estates be contacted and when will payments be made?

NS&I said it will start sending out letters to executors and personal representatives of impacted estates with holdings of £10 or more from next week, with any payments following “soon after”.

Letters will be sent out in weekly batches, with payments to all affected estates expected to be made by midway through 2027.

The letters will say how much estates will be repaid, as well as how any legal costs or administrative fees incurred through the payments can be reclaimed.

A dedicated NS&I phone number will also be provided in the letter.

NS&I said where an estate can’t be contacted, it will continue to hold any funds which will continue to accrue interest until the estate gets in touch.

Will payments be taxed?

Torsten Bell, minister for pensions, confirmed to the House of Commons on 19 May no inheritance tax will be owed on any reimbursed holdings.

Executors of estates will also not be liable for income tax on any interest accrued before the death of a loved one.

NS&I introduces new search process following operational error

The error which led to the 34,000 estates’ money going missing occurred due to the search process used when handling a bereavement claim failing to identify all NS&I products.

NS&I said the issue had been resolved and a new process was introduced in January 2026, however, this new system has resulted in delays for current and new bereavement claims.

The typical wait time for NS&I to respond to bereavement claims is two weeks, but the current response time is eight weeks.

NS&I said it has brought in an extra 100 staff to improve the service which it expects to be back to normal by autumn 2026, with Sir Jim apologising for the delays.

Sarah Coles, head of personal finance at investment platform AJ Bell, commented: “Anyone who has had to deal with an estate is no stranger to delays.

“Executors have to stick to strict deadlines, and for estates where inheritance tax is due, money has to be handed over within six months of the end of the month in which the person died.

“It means any delays in the process can be expensive as well as frustrating. The extra six weeks’ wait from NS&I will come as yet another headache for anyone slogging through the process.”

NS&I is boosting the prize fund rate on Premium Bonds, increasing the chances of winning a prize, and raising interest rates on four other savings accounts.

The government-backed savings bank will increase the prize fund rate from 3.3% to 3.8% and improve the odds of winning from 23,000 to one to 22,000 to one from the July draw.

NS&I said there will be an estimated 322,000 more prizes in the July draw, with the prize pot growing by £60 million.

The number of £25 prizes is falling, but there will be 12 more £100,000 payouts, as well as 24 more £50,000 prizes up for grabs.

From today (14 May), NS&I is also raising the interest rates on four savings accounts: its Direct Saver, Income Bonds, Direct ISA and Junior ISA.

What will the changes to Premium Bonds and the savings accounts be?

There will be over 6.2 million Premium Bonds prizes up for grabs from the July draw worth more than £436.8 million.

Here is what the number and value of Premium Bonds prizes will be:

Credit: NS&I

Meanwhile, this is what the old and new interest rates are on the four savings accounts:

Credit: NS&I

Do the changes to Premium Bonds make them worth it?

Greig Bingham, head of financial modelling at financial services consultancy Broadstone, said NS&I was “clearly looking to make Premium Bonds more attractive again” after it reduced the prize fund rate in April in response to a base rate cut in December.

He said alongside the rise in the prize fund rate and increased odds of winning, one big positive was the shift in the make-up of the prizes.

The £25 prizes currently make up 47% of all prizes, but this will drop to 37% from July, while the number of higher-value prizes will rise.

“That means a greater share of the prize fund is being directed towards higher-value prizes, which could make the product feel more rewarding for savers fortunate enough to win,” Bingham said.

The other perk to Premium Bonds is that any winnings are tax-free, meaning they can be a useful addition to your wealth portfolio after you’ve maxed out your ISA allowance and personal savings allowance. Your savings are also 100% secure with NS&I.

However, the odds of winning a Premium Bonds prize are relatively low – around 62% of people who have Premium Bonds have never won a prize in the monthly draw, according to research by Vanguard.

You also don’t receive guaranteed interest on any Premium Bonds held, meaning, if you don’t win any prizes, your deposit erodes in value due to inflation.

Are the four savings accounts worth it after the increase in interest rates?

Rachel Springall, finance expert at data firm Moneyfactscompare, said: “Savers who prefer to keep their pots with NS&I will be delighted to see rates increase, but it is worth noting that the top rates on the market are over 4% on easy-access accounts, with some top fixed accounts paying well over 4.5%.”

NS&I’s Direct Saver, a taxable easy-access savings account, is now paying a 3.45% gross/AER interest rate on a minimum £1 deposit. Interest is paid yearly.

However, savers can get a 4.2% interest rate with Yorkshire Building Society’s Triple Access eSaver.

Savers can also get a 4.5% AER interest rate, including a boosted 2.25% AER rate for the first 12 months, with Chase’s easy-access savings account.

The Income Bonds, another easy-access savings account but with interest paid monthly instead of yearly, is now paying a 3.4% gross/3.45% AER interest rate on a minimum £500 deposit.

But, OakNorth Bank’s Easy Access Tracker pays 4.14% AER interest, with interest paid monthly, and you can open an account with just £1.

NS&I’s Direct ISA, an easy-access tax-free account, is now paying 3.8% AER interest on minimum deposits of £1.

However, Trading 212’s Cash ISA pays 4.51% AER, including a 0.91% bonus rate for the first 12 months.

The NS&I Junior (cash) ISA is paying 3.7% AER interest and is offering a competitive rate. As of 14 May, it’s in the top 10 for cash Junior ISAs on the Moneyfactscompare website.

However, you can get a higher 3.8% rate with Skipton Building Society’s Junior Cash ISA.

All of the above savings accounts are from providers that are FSCS-protected meaning your savings are protected up to the value of £120,000 per person, per authorised firm.

Two lucky savers have become millionaires overnight after NS&I announced the winners of May’s Premium Bonds prize draw.

The prize draw distributed almost six million prizes to those who have their cash saved in premium bonds, with the windfalls being collectively worth over £376 million.

Prizes ranged from the smallest and most common amount of £25, to the rarest prize of £1 million, with only two bondholders scooping this. Other prizes are worth anything between £1,000 and £100,000.

The first of these is based in Suffolk, and holds the winning bond number 567VN857011. They purchased the bond in January 2024 and hold £50,000 in Premium Bonds, the maximum holding an individual can have.

The second £1 million winner holds bond number 643SE292364 and is based in the Scottish Highlands and Islands. They bought their winning bond in September 2025, meaning they held it for less than a year before they scooped the jackpot.

Both of these savers will have received a knock on the door by Agent Million, an anonymous NS&I employee that travels the country to inform jackpot winners of their newfound wealth.

While jackpot winners are announced on the first working day of each month, winners of lower value prizes will not have to wait long until they can find out if they got lucky – you can check if you won from 2 May onwards.

How many people won in the May 2026 Premium Bonds prize draw?

Just under six million people will be richer after the prizes from the May Premium Bonds draw are distributed.

In total, there were 5,947,523 tax-free prizes drawn this month worth a collective £376,180,825.

While most of these prizes will be worth £25, there will still be a significant number of winners for higher-value prizes with 17,682 prizes worth between £1,000 and £100,000 distributed this month.

The table below shows the breakdown of May’s prize draw.

Source: NS&I, 1 May

In May, the odds of winning a prize of any size stood at 23,000 to 1 for each £1 you have saved in Premium Bonds.

Meanwhile, the prize fund rate, the rate of return a bondholder with “average luck” can expect, was 3.3%.

How to check if you won in May’s prize draw

The jackpot winners in each month’s draw are told they won by receiving a visit from Agent Million, so if you didn’t get a mysterious knock on your door it’s unlikely you won the jackpot.

However, you may still have won a smaller prize.

All winners can check if they won Premium Bonds prizes ranging from £25 to £100,000 the day after the first working day of each month via the Premium Bonds prize checker app or by visiting the NS&I website.

For this month’s draw, you will be able to check if you won from 2 May onwards. Make sure you’ve got your Bond or NS&I number to hand so you can access your account.

As Premium Bonds do not expire, it may be worth checking if you have any prizes waiting for you even if you bought them years ago.

NS&I says over 99% of prizes have been paid to winners since draws began in 1957, but there are still millions of unclaimed Premium Bonds prizes.

We look at the alternatives to Premium Bonds in a separate piece.

NS&I has boosted interest rates on a host of savings accounts, including fixed term savings bonds and an easy-access account with immediate effect.

The rate increases mean they sit close to other best buy savings accounts of the market right now.

The UK government-backed bank, which is popular for its premium bonds, has upped the savings rates on eight one to five-year fixed-term savings bonds and its Investment Account.

We list the accounts that have gone up and how they compare to the rest of the market.

Which NS&I accounts will pay more?

This is the first time NS&I has boosted the rates on its one to five-year savings bonds since January this year.

These are the nine accounts having their interest rates boosted:

• Guaranteed Growth one-year bond: Rising from 4.07% gross/AER to 4.5% gross/AER
• Guaranteed Income one-year bond: Rising from 4% gross/4.07% AER to 4.41% gross/4.5% AER
• Guaranteed Growth two-year bond: Rising from 3.98% gross/AER to 4.48% gross/AER
• Guaranteed Income two-year bond: Rising from 3.91% gross/3.98% AER to 4.4% gross/4.48% AER
• Guaranteed Growth three-year bond: Rising from 4.02% gross/AER to 4.45% gross/AER
• Guaranteed Income three-year bond: Rising from 3.95% gross/4.02% AER to 4.37% gross/4.45% AER
• Guaranteed Growth five-year bond: Rising from 4.05% gross/AER to 4.4% gross/AER
• Guaranteed Income five-year bond: Rising from 3.98% gross/4.05% AER to 4.32% gross/4.4% AER
• Investment Account: Rising from 1% gross/AER to 2.05% gross/AER

You can open one of the eight bonds with a minimum investment of £500 and can add a maximum of £1 million. The accounts are fixed-term so funds cannot be withdrawn early.

After the accounts mature, you can withdraw any cash or reinvest it into a new NS&I account.

You can apply for the accounts on the NS&I website.

Savers can only apply for the Investment Account through the post. You can find out more by contacting NS&I.

NS&I also recently brought back its green savings bond, offering savers a three-year fixed rate at 3.82%.

How do NS&I's savings accounts compare to other deals?

Despite NS&I hiking the rates on its savings accounts, there are slightly better options out there if your key requirement is to get the top rate, based on the latest data from Moneyfacts.

The better deals are via small providers that are protected by the Financial Services Compensation Scheme (FSCS).

Kalpana Fitzpatrick, digital editor-in-chief of MoneyWeek, said: “While you may find slightly better rates, and we are talking about a small difference, it is worth noting that NS&I is backed by the government, meaning your cash will always be 100% safe. While most banks are protected by the FSCS, this is limited to £120,000 with any given group of banks, so if you need to hold more cash, NS&I is an attractive option.”

NS&I’s one-year bonds offer you rates up to 4.5% on a minimum investment of £500, but thisbank is offering a one-year fixed savings account with a 4.55% gross/AER interest rate with a £100 investment.

Meanwhile, NS&I’s two-year bonds offer you an interest rate of up to 4.48% on a £500 minimum investment, but thisbank’s two-year fixed-rate account has an interest rate of 4.57% on a minimum investment of £100.

NS&I’s three-year bonds’ interest rates are up to 4.45% on a £500 investment, but thisbank has a three-year fixed-rate account paying 4.59% on a £100 minimum investment.

Opt for one of NS&I’s five-year bonds, and you’ll get an interest rate of up to 4.4%, but thisbank is offering a five-year savings account paying 4.57% on a minimum investment of £100.

“If you are in a position to lock your money away for five years or more, then consider investing some or all of it, where returns can be higher over the long term and you can protect your money from being eroded against inflation,” Fitzpatrick added.

In terms of NS&I’s Investment Account (2.05%), you can get much better rates on easy-access savings from a number of banking providers, including Newcastle Building Society which has a savings account paying 4.15% interest.

NS&I has brought back its green savings bond, offering savers a three-year fixed rate at 3.82%.

The account can be opened by anyone aged 16 or over with a minimum investment of £100 while the maximum amount you can hold is £100,000.

Interest accrues daily and is added to the account once per year. Savers can buy green savings bonds on the NS&I website.

Money cannot be withdrawn from the account until the end of the three-year period and any interest earned is taxable when the bond matures.

NS&I first launched green savings bonds in 2021, with the last issue taken off the market in November 2025.

Money held in the accounts is used to fund environmental projects across the UK, including renewable energy and pollution prevention and control initiatives.

We explain how NS&I’s Premium Bonds work in another article.

Is the NS&I green savings bond worth it?

NS&I is 100% secure, so any money held in a green savings bond will be protected. You might find it reassuring knowing your savings are funding green projects across the UK too.

However, you can currently get more competitive rates from a number of other banking providers.

Rachel Springall, finance expert at data firm Moneyfactscompare, said: “This latest offering from NS&I will likely be an enticing choice for savers who are content to lock their cash away for three years.

“However, the rate can be beaten by alternative brands, as many of the top rate deals pay 4.5% or more.”

The best green savings account rate is with Castle Trust Bank. Its three-year fixed rate e-Cash ISA pays a 4.42% interest rate.

Savers can open one of the accounts online via the bank’s website. You can make withdrawals before the end of the three-year term, but you will be hit with early exit charges.

Castle Trust Bank is also offering savers a three-year fixed rate e-Saver paying 4.21%, with any interest earned taxable.

Again, savers can open one of the accounts online and early withdrawals come with an early exit fee.

Castle Trust plants a tree when either of these two accounts are opened and the minimum investment of £1,000 is made within 14 days.

Tandem Bank and Gatehouse Bank also have three-year green fixed savings accounts, which pay 4% and 3.85%, respectively.

Credit: Moneyfactscompare

All of these alternative savings accounts offering better rates than NS&I (as of 15 April) allow savers to have holdings of £100,000.

What is a green savings account?

A savings account is usually green if the banking provider has committed to putting your funds towards environmentally-friendly purposes or not using them to fund industries relying on carbon-emitting industries such as fracking.

For example, Triodos Bank uses money added to its savings accounts to fund sustainable and environmentally-friendly projects across the UK.

Meanwhile, other banks like Gatehouse Bank plant trees for every account that is opened and funded with it.

The new tax year has begun, and with it comes a fresh £20,000 annual ISA allowance. But should you use this allowance right at the start of the year, or leave it later?

As well as knowing where to invest, and making sure you select the best funds and stocks for your portfolio, the timing of your ISA contributions will have a significant impact on your returns over time.

Analysis shows that early bird ISA investors who make use of their ISA allowance from the start of the tax year tend to do better than those who invest at the last minute.

Analysis from asset manager Vanguard shows that a hypothetical investor who invested their entire £20,000 allowance on 6 April 2025, and did the same at the start of each subsequent tax year, would see their pot grow to £1,079,320 by the end of the 25th year (assuming a 5.5% annual return after fees).

Waiting until the end of each tax year to invest the £20,000, though, would leave the same investor with £1,023,052 – around £56,000 less, just by virtue of waiting until the end of the tax year.

“Time in the market really matters,” said James Norton, head of retirement & investments at Vanguard. “We see that many people rush to max out their ISA allowance at the end of a tax year, rather than at the beginning, missing out on almost a year of tax-efficient returns.

“The key is to make your money work for you as early as you can, in a way that fits your circumstances,” Norton added.

Over the entire history of ISAs, since their introduction in 1999, early bird ISA investors could be £83,000 better off than last-minute investors, according to analysis from investment platform InvestEngine.

Putting the £20,000 annual ISA allowance into the MSCI ACWI Net Total Return (GBP) index at the start of every financial year since April 1999 would have built a pot worth £1,277,963, compared to the £1,195,127 that the same contributions would have grown to if made at the end of each year.

“With the new lower cash ISA limit set to come in next year, those considering a stocks and shares ISA for the first time could benefit by starting early with their investments. Even small amounts can make a big difference over time.”

How do early bird ISA investors perform compared to regular monthly investors?

Meanwhile, asset manager Fidelity International compared three approaches to ISA investing: using the entire ISA allowance at the start of the tax year (Early), using it all at the end of the year (Late) or drip-feeding the allowance through monthly across the course of the year (Regular monthly).

Again, the best approach was to invest the entire allowance at the start of the year, based on historic returns of the FTSE All Share Index:

^{Source: Datastream, Fidelity International, 05/04/2001-06/04/2026 Total return in GBP of FTSE All Share}

^{Source: Datastream, Fidelity International, 05/04/2016-06/04/2026. Total return in GBP of FTSE All Share}

“For many people, investing regularly can make the process feel more manageable,” said Marianna Hunt, personal finance expert at Fidelity International. “It helps reduce the pressure of trying to time the market and can take some of the emotion out of investment decisions.

“What matters most is making use of your ISA allowance and maintaining a long-term focus,” Hunt added.

NS&I has announced the jackpot winners of April’s Premium Bonds prize draw, with the two lucky savers scooping £1 million each.

More than £376 million was distributed among almost six million Premium Bonds holders this morning, with payouts ranging from £25 to £1 million.

The first jackpot winner is based in the Hampshire and The Isle of Wight area and holds bond number 511HH360429. They purchased the winning bond in August 2022 and have a total Premium Bonds holding of £50,000, the maximum you can have.

The second overnight millionaire is based in Surrey and holds bond number 519FV988513. They bought this bond in November 2022 and also hold the maximum £50,000 in Premium Bonds.

Both of these lucky winners will have been paid a visit by ‘Agent Million’ – an elusive NS&I employee who travels across the country to inform jackpot winners of their newfound wealth.

While jackpot winners are announced on the first working day of each month, winners of lower-value prizes have to wait until the day after (2 April this month) to see if they won.

How many people won in the April 2026 Premium Bonds prize draw?

Just under six million people won between £25 and £1 million in April’s prize draw, with the vast majority bagging the lowest £25 prize.

In total, 5,951,866 prizes were distributed this month, worth a collective £376,455,425. There were 136,892,884,477 bonds eligible for the draw.

A breakdown of the prizes by their value can be found below:

Source: NS&I

April marked the first prize draw since NS&I’s new, lower, odds of winning came into effect. The odds of winning stand at 23,000 to one for each £1 held in the savings vehicle. It had previously been 22,000 to one.

It is also the first with the new, lower prize fund rate of 3.3%. NS&I says this metric represents the rate of return for a bondholder with “average luck”. The rate had previously been 3.6%.

How to check if you won in April’s prize draw

The £1 million jackpot winners in each month’s draw are told they won by receiving a visit from Agent Million.

All other winners can check if they won other prizes ranging from £25 to £100,000 the day after the first working day of each month via the Premium Bonds prize checker app or by visiting the NS&I website.

Make sure you’ve got your Bond or NS&I number to hand so you can access your account.

As Premium Bonds do not expire, it may be worth checking if you have any prizes waiting for you even if you bought them years ago.

NS&I says over 99% of prizes have been paid to winners since draws began in 1957, but there are still millions of unclaimed Premium Bonds prizes.

We look at the alternatives to Premium Bonds in a separate piece.

Are Premium Bonds right for you?

Premium Bonds are one of the UK’s most popular savings vehicles, but some question whether they are right for everyone.

Premium Bonds do not earn an interest rate. Instead, there is the possibility that you could win a prize in the monthly draw – although there are no guarantees.

It means that if you do not win, your money stays static.

In 2025, first-time Premium Bonds winners had money invested in them for over three years on average before seeing any return, new data obtained by Quilter found.

Furthermore, as the monthly prize draws give you one entry for each £1 you have saved in Premium Bonds, those with more money in them are more likely to win.

The average holding for savers who won at least one prize in any of 2025’s 12 Premium Bonds prize draws was £39,500, Quilter found.

Meanwhile, separate data from AJ Bell found that around two thirds of all Premium Bonds holders have never won a single prize.

That is not to say that there are no merits to Premium Bonds. Prizes are all tax-free, meaning that what you win is what you get.

This makes keeping money in Premium Bonds particularly useful for those who have already used up their annual £20,000 ISA allowance but still want to save some cash tax-free.

Premium Bonds holders could be waiting years before ever winning a prize, meaning cash could be missing out on years of savings interest.

In 2025, first-time Premium Bonds winners waited an average of 3.1 years before they won a prize, a freedom of information request sent to NS&I by Quilter revealed.

Around one in three (29%) Premium Bonds holders who won their first prize in 2025 had been waiting for more than two years.

There is no guarantee of winning a prize in the Premium Bonds draw, meaning your cash could lose purchasing power as inflation rises.

Money held in the product does not earn an interest rate like with traditional savings accounts. Instead, you could potentially see growth if you win in the monthly prize draws.

The odds of winning in the Premium Bonds prize fund draw will stand at 23,000 to 1 per £1 Bond number from April.

The more money you hold in Premium Bonds, the greater chance you have of winning – those who do not have a lot saved in the product are much less likely to win.

The average holding for savers who won at least one prize in any of 2025’s 12 Premium Bonds prize draws was £39,500, figures obtained by Quilter found.

Ian Futcher, financial adviser at Quilter, said: “Premium Bonds are held very close to the nation’s heart but help to underscore the scale of the cash savings problem the UK has.

“The allure of high value prizes, alongside tax free winnings, means people are putting an inordinate amount of money into Premium Bonds when they would perhaps be better off parking their cash elsewhere.”

Are Premium Bonds worth it?

With savers waiting for more than three years on average before they get any return whatsoever on the money, you might wonder whether Premium Bonds are worth it.

The answer to this question is not definitive. For some people Premium Bonds are a good option, while others may be better served by a more traditional savings account.

Premium Bonds have three key positives. Firstly, any money you win from Premium Bonds prizes are entirely tax-free, meaning what you win is what you get.

For this reason it may make sense to put money in Premium Bonds once you have used up your annual ISA allowance, such as via a cash ISA, as putting it in a taxable savings account means you risk having to pay tax on the interest earned.

This is particularly useful if you are a higher-earner who wants to put significantly more than £20,000 (the current annual ISA allowance) in cash savings each year.

Secondly, keeping your savings with NS&I is effectively risk-free.

When you keep cash with traditional banks, you run the risk of losing money if the bank goes under, if the money is not FSCS-protected. However, as NS&I is an arm of the government, any money you hold with them is effectively guaranteed to be safe as there is very little risk of total government collapse.

That means that every penny you hold in Premium Bonds is effectively 100% safe.

Finally, Premium Bonds can simply be fun. There is a certain allure to the process, with savers checking if they won a prize each month – including two £1 million jackpot payouts.

However, there are many negatives to keeping money in only Premium Bonds.

As shown above, you are much less likely to win in the monthly prize draw if you do not hold much money in Premium Bonds.

NS&I says someone with “average luck” should see their money grow by just 3.3% each year. Not only is that lower than some of the top savings accounts on the market, it is also not guaranteed as you may not win.

Ultimately, whether or not Premium Bonds are worth it depends on your particular financial circumstances.

If you have a lot of money you want to save in cash left over after using your £20,000 annual ISA allowance, Premium Bonds may be a good place to grow your cash tax-free.

But if you have just £25 to put in the savings vehicle each month, you may find you’ll grow your money faster and more reliably via a traditional savings account or cash ISA.

A group of 270 UK individuals are part of an exclusive community that is technically open to everyone in the country, if you have the time, money and investment performance to join – the £2 million ISA club.

The figure, revealed in a Freedom of Information request to HMRC by financial planning firm Bowmore Wealth Group, showed just what is possible if you take your ISA savings ultra seriously over the long term.

By investing the full annual ISA allowance of £20,000 – equivalent to £1,666 a month – in a stocks and shares ISA and achieving an average annual return of 7%, investors could build a £2 million tax-free portfolio over three decades, according to Bowmore’s calculations.

John Clamp, chartered financial planner at Bowmore, said: “Reaching a £2 million ISA pot is no longer an unrealistic ambition for investors and could be achieved tax-free in as little as 31 years with consistent investing.”

We look at some of the best stocks and shares ISAs in a separate article.

The benefits of long term investing

The findings highlight the growing importance of ISAs as a long-term wealth-building tool, particularly as more savers look to make the most of tax-free returns.

However, Bowmore warned many investors risk falling short of their goals by holding too much in cash ISAs for too long or by dipping into their savings prematurely.

While cash ISAs may appear to offer security, their lower returns can significantly slow wealth accumulation over time – often shrinking in real terms due to inflation. In contrast, investing in equities can dramatically accelerate long-term growth, particularly when returns are compounded.

Clamp said: “ISA millionaires are becoming increasingly common but the next milestone – the £2 million ISA – is already within reach for many investors who take a long-term view.”

“The real difference comes down to behaviour. Consistently investing the full allowance and allowing returns to compound over time can turn what seems like an ambitious target into something very achievable.”

From £1 million ISA to £2 million ISA

Separate research by investment platform AJ Bell found it takes 25 years of saving £1,433 a month – or £17,196 a year, less than the £20,000 annual allowance – to build up a £1 million ISA. But it only takes a further 10 years to make it to the £2 million mark. This is assuming you get 6% growth on your investments.

Laith Khalaf, head of investment analysis at AJ Bell, said: “It’s no walk in the park to build up a million pound ISA, but once you get there, hitting new milestones becomes increasingly easy because you have a huge tailwind from growth on the money you’ve already stashed away – known as compound growth.”

He added: “Compound growth is a formidable force, though you do have to be diligent and patient to harness its power. Clearly the higher the return you achieve on your investments, the more powerful the effect of compound growth on your wealth.”

Over the long term, then, a cash saver is likely to see a weaker compounding effect than an investor putting their money into the stock market, though the investor will of course see greater fluctuations in the value of their holdings along the way.

Effects of compound growth

“Compound growth is a wonderful thing when you break it down,” said Khalaf. “Even to reach your first million pounds in 25 years, you would only need to save less than half of this sum, or £429,900, because the remainder would be made up by growth on the savings you make (assuming 6% net fund growth).

On this basis, after 12 years of saving £1,433 a month, your annual ISA fund growth is already exceeding the £17,196 you’re putting away each year. This effect gets turbocharged the more you save, because of the growth on the pot of money you’ve already built up.

Khalaf said: “This explains why it only takes 10 years, rather than 25 years, to save your second million. In other words, it’s 2.5 times easier to save your second ISA million than your first.”

This is reflected in the amount you need to save as well. To get from £0 to £1 million in 25 years you need to stump up £429,900. But to get from £1 million to £2 million by saving £1,433 a month, you would only need to stash away £171,960 yourself.

Over a decade of saving, you would receive £859,189 in growth, because not only are your new savings growing, but so is the million pounds you’ve already built up in your ISA.

Source: AJ Bell, based on 6% net fund growth per annum. Numbers do not add to round millions as they have been calculated based on whole years of saving.

To get to your third million would only take a further six years of saving £1,433 a month. During this time you would only need to stump up £103,176 in savings, with £874,067 accruing in fund growth.

In total that means 41 years of saving £1,433 a month to get to £3 million.

“If you are in the fortunate position to be able to do that, over the course of those 41 years, you would have stashed away £705,036, with the remaining £2,303,414 coming from fund growth,” Khalaf pointed out.

NS&I is expected to pay out hundreds of millions of pounds to bereaved families, following an “operational failure” to trace accounts for some deceased customers.

An estimated 37,500 savers are understood to be affected by the errors, with the missing payments worth up to £476 million.

Speaking in the House of Commons today, pensions minister Torsten Bell said around three quarters of the cases relate to the period between 2008 and 2025.

Bell said the government has asked NS&I to publish a plan in May detailing how it will reunite estates with their money, as well as how many savers are impacted.

NS&I has said it "is extremely sorry for these errors" and will contact affected estates. The savings provider will publish further information for the beneficiaries of those estates in due course.

These deposits belong to the customers, and reuniting beneficiaries with them does not represent an additional liability to the taxpayer, Bell said.

The pensions minister said NS&I notified the Treasury on 18 December 2025 of an “operational failure to comprehensively trace accounts for some customers who had passed away”.

“The result of this failure is that not all savings were identified by NS&I and paid to the beneficiaries of their estates as they should have been,” he said.

“Specifically, processes failed to comprehensively trace some customer holdings where those were spread across multiple profiles or systems.”

NS&I said the errors occurred because the search process used when handling a bereavement claim failed to identify all NS&I products.

Bell said customer-facing supplier Sopra Steria, which delivers customer services for NS&I, said the causes of the tracing issue had been addressed and will not affect customers moving forward.

NS&I’s previous supplier, Atos, which was responsible for handling bereavement cases until 2025, “has also committed to full cooperation,” Bell said.

The pensions minister said affected customers’ money is still 100% safe.

Affected individuals will not need to contact a claims management company or solicitor to be reunited with their money.

From today, former HMRC boss Sir Jim Harra will take over as chief executive of NS&I, replacing Dax Harkins, and will undertake a review of the savings bank.

The statement comes following an investigation by The Telegraph which found cases of families of deceased NS&I customers struggling to obtain money that is rightfully theirs.

An NS&I spokesperson said: “We recognise that dealing with bereavement can be challenging and would like to apologise to anyone who has not received the customer service from NS&I that they should expect, particularly at such a sensitive time.”

A Sopra Steria spokesperson said: "A legacy issue has been identified that affected the settlement payments to the estates of some NS&I deceased customers, which originated before our contract began. The tracing process has now been updated to ensure beneficiaries are reunited with the correct funds. We are working closely with the NS&I teams as they look to trace and return funds to all those affected.”

MoneyWeek approached the Treasury and Atos for comment.

Will affected families receive compensation?

Pensions minister Bell acknowledged that there may be tax implications for affected estates, and said the Treasury wants to “avoid bereaved families facing disproportionate disruption and administrative costs as a result of this error”.

The Treasury is exploring what support can be provided. This will be set out alongside NS&I’s delivery plan in May.

NS&I also said it will ensure customers' estates are "appropriately compensated", with more information due in May.

Public Accounts Committee’s damning report on NS&I

It comes just weeks after the Public Accounts Committee criticised NS&I over rising costs and delays in modernising its systems.

The damning report from the committee said the savings bank “did not have the skills to deliver” the Business Transformation Programme which it launched in 2020.

The report noted that the programme was rated “red” in 2022/23 and 2023/24, meaning successful delivery of the project was “unachievable”.

The total cost of the programme, including running costs, were estimated to have hit £3 billion in 2024.

The report went on to explain how NS&I “has not demonstrated to us that it understands and accepted what went wrong” and that it “remains overconfident about its ability to meet its current timetable”.

The committee also said customers could be at risk if the programme is unsuccessful.

Have you been affected by this issue? If you'd like to share your story, get in touch by emailing editor@moneyweek.com.

The end of the 2025/26 tax year is nearly here, with just weeks left before annual tax-free allowances reset. Some of these tax breaks will be lost forever if you don’t use them this tax year.

With countless allowances and deadlines to keep track of, MoneyWeek’s tax year end checklist could help you to save you money before the end of the financial year.

If you’re an investor with money in Venture Capital Trusts (VCTs) or the Seed Enterprise Investment Scheme (SEIS), you may need to check the experienced investor’s end of tax year checklist.

So how much do you know about the end of the tax year? Test yourself in our quiz.

How well did you fare in the quiz? Share your results on social media.

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• ISA guide: Everything you need to know
• Stocks and shares ISAs: everything you need to know
• How to find the best stocks and shares ISA
• The most popular investments for ISAs

Sometimes it seems we are too hard on Rachel Reeves. Yes, she is a bad chancellor: anti-business with no coherent vision for getting the economy growing and no backbone when she is pushed by her party. On the other hand, it has been seven years since Britain had at least a semi-competent chancellor, and she has inherited a catastrophic mess that would be a gigantic challenge even for an outstanding one.

One might briefly feel that she deserves some support as an under-qualified person trying to do an impossible job at the head of a sclerotic Treasury that needs to be broken up and rebuilt. Then you look at her proposed changes for individual savings accounts (ISAs) and all sympathy goes right out the window.

A brief history of ISA rules

To see why these ISA rule changes are so misguided and why they show Reeves and her team to be truly clueless about investing, let’s go back to when ISAs were first launched back in 1999. The ISA rules then were much more restrictive.

You could pay up to £7,000 into a “Maxi Stocks & Shares ISA” each year, or up to £3,000 into a “Mini Stocks & Shares ISA”, up to £3,000 into a “Mini Cash ISA” and up to £1,000 into a little-used “Insurance ISA” that let you put money into with-profits funds from an insurance company (which in theory was supposed to be less volatile than investing directly in the stock market). You could transfer from a cash ISA to a stocks and shares ISA, but not the other way round. Interest on cash held in stocks and shares ISAs was taxed at 20%. Investments had to have a credible possibility of losing at least 5% of the capital. Bonds had to have at least five years remaining until maturity when they were purchased.

There were a few tweaks through the years before 2014 when then-chancellor George Osborne greatly improved the ISA rules: a higher annual limit of £15,000 could now be split between a cash ISA and a stock and shares ISA in whatever proportions you liked. Money could be freely transferred between both. Cash interest was no longer taxed in a stocks and shares ISA, and low-risk cash-like investments were allowed.

This was a huge step forward. Subsequent changes to ISA rules include flexibility, allowing you to take out money temporarily and put it back again without affecting your annual allowance. You can also now contribute to more than one ISA of each type each year. Today, the ISA is probably the best account of its kind in the world and has inspired similar products in other countries.

Set against this, new types of ISA added complexity. The Help to Buy ISA was a counterproductive attempt to solve the housing affordability crisis that is now a legacy zombie product. The Lifetime ISA's potential as a flexible retirement savings tool was weakened by overly tight age limits and by withdrawal penalties. The Innovative Finance ISA has been too niche for most investors. So further reforms were overdue.

What should happen is the merger of most types of ISAs to create a flexible general-purpose wrapper. All providers could choose what to offer in the wrapper – including cash, investments and innovative finance products – according to what kind of customers they wanted to serve. Lifetime ISAs would probably remain as a separate product with similar flexibility, but open to a wider age range, with fairer withdrawal rules and the ability to transfer in stranded Help to Buy ISAs.

Rachel Reeves's ISA rule changes would be a retrograde decision

Instead, Reeves and the Treasury came to believe that restricting the ability to hold cash would encourage more money to go into the UK stock market. So, unless there is a change of heart, ISAs will take a huge step backwards from April 2027.

Cash ISAs will have a lower annual contribution limit (£12,000 versus £20,000). You will be able to transfer from a cash ISA to a stocks and shares ISA, but not the other way. Cash-like investments such as money market funds will no longer be allowed in stocks and shares ISAs. Interest paid on cash held in stocks and shares ISAs will be taxed.

In other words, we are returning to many of the pre-2014 ISA rules. The degree of stupidity required to attempt this cannot be overstated. Whoever came up with this proposal does not appreciate what investors and savers need and has ignored all the clear benefits that previous reforms delivered.

MoneyWeek would be the first to agree that there is a problem with attitudes towards investing in Britain, but the current ISA rules have nothing to do with that. Quite the opposite: at present, you can put money into as many cash ISAs or stocks and shares ISAs as you like, transfer between them freely, and hold investments then move to cash in the same account if you are nervous about markets or you need to reduce risk. This flexibility is reassuring. Your money does not feel trapped.

Trying to coerce people to invest by restricting cash ISAs is not going to work. They will simply hold cash in taxable accounts instead rather than take risks they don’t want. Much more plausible reasons why people in the UK are unwilling to invest are i) regulators that have been far too keen to talk up the risks of mainstream investments while doing far too little to crack down on unregulated scams and ii) the ongoing national obsession with property.

Depressingly, Reeves’ other proposed ISA rule changes also include plans to end the Lifetime ISA and bring in a new Help to Buy ISA. Whether this will increasingly leave existing Lifetime ISAs as a zombie product, like the original Help to Buy ISA, remains to be seen. Regardless, it would clearly be another retrograde decision. And if the stock market remains moribund, it can only be a matter of time before the immensely idiotic idea of a “British ISA” limited to UK stocks – or, even worse, restricting international investments in all ISAs – also gets resurrected.

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Very few people want the stock market to crash, potentially wiping out years worth of gains – but they do happen.

Since the turn of the millennium, investors have experienced numerous crashes, navigating through everything from pandemic-induced losses to a crisis that threatened the entire global financial system.

With fears mounting that we could be on the verge of an AI bubble, it might be a good idea to study the history of market crashes and see if there are any lessons to be learnt.

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Investors are being urged to consider consolidating their stocks and shares ISAs onto one investment platform, but there are risks to be aware of.

With the end of the tax year approaching, investors have just weeks to make use of their ISA allowance and there are also plenty of cashback incentives around to transfer your tax-free savings from previous years.

Research by interactive investor found a third of investors currently have more than three different providers holding their ISA or pensions and almost half have two.

The platform claims investors with a £75,000 portfolio split between three providers, could save £844 over a five-year period by consolidating into a single account with interactive investor, which charges a flat fee rather than a percentage of the portfolio's value.

This assumes investment growth of 5% per annum and a £25,000 investment with three providers: Hargreaves Lansdown, AJ Bell, and interactive investor.

There are other factors to consider though such as trading fees, the product range on offer and functionality such as apps and research tools as well as customer service.

Other investment platforms may even work out cheaper, depending how much you invest and how regularly you are trading shares or funds.

For example, interactive investor’s cheapest plan starts at £5.99 per month or £71.88 a year.

But Scottish Widows Share Dealing, formerly IWeb, which is owned by Lloyds Banking Group, doesn’t charge any annual or ongoing fees. Trades cost £5 each.

Aside from fees, there are other factors to consider if you plan to consolidate your ISA.

Why consolidate your ISA?

Consolidating your ISA can mean paying one fee, which ideally should work out cheaper

It also give you a more complete view of your finances.

Brian Byrnes, director of personal finance at Moneybox, said: “The biggest win for consolidation is simplicity. With a single provider, you don’t have to juggle multiple accounts, passwords, and apps.

“On top of this, a single view allows you to see your progress instantly. It’s simpler to know exactly how much you have saved for your house deposit, your emergency fund, or your retirement when it’s all on one dashboard. This visibility helps you stay motivated and make faster, more informed financial decisions.”

Consolidating your ISA gives you more control and helps avoid duplicate holdings.

Plus it can help set a clearer strategy.

Ben Faulkner, of EQ Investors, said: “Bringing a portfolio together helps you check you’re properly diversified and haven’t invested more in some areas than you’d intended.

“You may want to invest in companies that are environmentally and ethically aware and look after their employees, but are you confident all your investments follow this approach?

“Consolidating your ISAs can help to ensure your aligning investments with your personal values.

Another benefit is estate planning for inheritance tax.

Rachael Griffin, tax and personal finance expert at Quilter, said: “With the government confirming that pensions will fall within the scope of inheritance tax from April 2027, consolidating financial accounts is likely to become more important for many families.

“This change means more estates will be pulled into inheritance tax and a single, well‑organised ISA structure will make life far easier for executors working through IHT reporting requirements.”

What to watch out for when consolidating an ISA

There may be downsides to consolidating though, particularly if there are exit fees.

Griffin says cost savings are possible, although not guaranteed.

She said: “Some platforms favour larger portfolios with flat fees, while others suit smaller balances with percentage charges. Consolidation only pays if the chosen platform’s structure is genuinely cheaper once everything is under one roof.

“The potential downsides are mostly practical. Exit fees, loss of preferential fund classes and the risk of being out of the market during a transfer all need weighing up. Not all assets can transfer in specie, and specialist holdings may not be fully portable.

Nouran Moustafa, practice principal at Roxton Wealth, says people need to watch carefully for exit fees, transfer costs, loss of access to certain funds or tax wrappers, and the risk of ending up less diversified than they were before.

She said: “The key is to consolidate with purpose, not just for convenience, and to make sure the new home is genuinely better, not just tidier.”

NS&I’s Premium Bonds offer a brilliant fantasy to savers – that one day you may wake up and find yourself a millionaire.

Most know that this is incredibly unlikely, with over 24 million bondholders trying to grab the two £1 million prizes given out each month, but a great deal of smaller prizes are distributed each month.

In the March Premium Bonds prize draw alone, a total of over 6.2 million prizes were paid out to savers, worth more than £410.6 million. While the vast majority (2.6 million) of these prizes were worth just £25, 19,318 were worth £1,000 or more.

And the cherry on top? All prizes won are tax-free.

Presented like this, Premium Bonds sound like a good way to grow your cash – but the statistics paint a much more dismal picture.

Around 62% of people who have Premium Bonds (almost two-thirds) have never won a single penny in any of NS&I’s monthly prize draws, research by AJ Bell shows.

That is equivalent to 14,298,580 individual account holders seeing their cash remain static as money held in Premium Bonds does not earn an interest rate.

The reason for this is that people who have a lot of money saved in Premium Bonds are far likelier to win prizes.

Laura Suter, head of personal finance at AJ Bell, said: “The allure of Premium Bonds resides in the potential for holders to win a prize up to a maximum of £1 million, but many of those with money in the accounts will never win – or see a return on their money at all.”

We look at how much you need to have in Premium Bonds to increase your chances of winning in the monthly prize draw.

How much do you need to save in NS&I Premium Bonds to be likely to win?

Put simply, the more money you have in Premium Bonds, the more likely you are to win in the monthly prize draw. This is because of how Premium Bonds work.

For every £1 you have saved in Premium Bonds, you get one entry in the prize draw.

For example, someone who has a £1,000 holding will get 1,000 entries in the prize draw, while someone who has the minimum £25 holding will get just 25 chances to win.

So, the more money you have saved, the more chances you have to win some of the prizes.

However, new data suggests you need a much larger holding than you may expect to win anything.

Fewer than 1% of all Premium Bonds prizes handed out between February 2025 and January 2026 went to accounts with a holding worth less than £1,000, according to a Freedom of Information request (FOI) submitted to NS&I by AJ Bell.

What is more, just 6% of the prizes distributed during that period went to account holders with £10,000 or less saved in Premium Bonds.

Conversely, 53% of all prizes went to those with the maximum account value of £50,000.

That means more than 90% of all prizes are being dished out to Brits with over £10,000 saved in Premium Bonds, making the hope of winning anything from Premium Bonds far-fetched if you do not put a serious amount of cash in them.

The data obtained from NS&I also showed that the average Premium Bond account value among the almost 14.3 million holders who have never won a single penny in prizes is £128.91, up by 21% since April 2025.

How can I increase my chances of winning in the Premium Bonds prize draw?

There is only one way to increase your chances of winning in the Premium Bonds prize draw, and that is to increase the amount of money you hold.

The way to maximise your chances of winning is to invest the maximum £50,000, with the data showing over half the total prizes go to savers with accounts this size.

However, if you are unable to reach that £50,000 number just yet, the figures show that the more money you put in, the higher the likelihood of winning will become.

You can do this by putting some savings into Premium Bonds each month to gradually increase the size of your pot. Alternatively, you are also given the option to automatically reinvest Premium Bonds winnings – that may be a good way to grow your pot too.

Where else could you put your money for guaranteed growth?

With more than half of all Premium Bonds winners having £50,000 in the savings vehicle, it raises the question of whether this is a wise choice.

On the one hand, having the maximum holding will make you much more likely to see some sort of return on your money every month, and you even have a chance to win £1 million.

But none of this is guaranteed. Even if you have the maximum Premium Bonds holding, there is still a chane you will not win a prize – those with especially bad luck may even see their cash be static for prolonged periods as they fail to win prizes.

If you put £50,000 into the top savings account on the market at the moment, the Chase Saver with boosted rate, you would see your money would be guaranteed to grow by 4.5% in one year to £52,250.

While it is true that, according to the statistics, it is very unlikely that your £50,000 will stay static over the course of a year, and indeed you might win prizes worth more than £2,250, none of this is guaranteed.

Could investing make more sense than Premium Bonds?

Investing the money you hold in Premium Bonds could be a better financial decision in the long-term than keeping them in the savings vehicle.

When winning no prizes, money help in Premium Bonds is entirely static. It does not grow and starts to erode away in real terms thanks to inflation.

Conversely, money invested in a well-diversified portfolio over the long term tends to grow – though, of course, the value of your investments can go down as well as up.

Suter at AJ Bell said: “Over the longer term, investing has proven to beat cash returns, and short of winning one of the maximum prizes will undoubtedly stand a better chance than Premium Bonds at helping someone to amass wealth.”

If you had invested into a global tracker fund like the Fidelity Index World ten years ago, you would have seen a return of 252.3%, according to AJ Bell calculations.

If someone with the average Premium Bonds holding for those who do not win (£128.91) had put this money into a global tracker fund instead of leaving it dormant in Premium Bonds, they will have seen their money grow to £454.19.

Meanwhile, if someone with £1,000 in Premium Bonds had instead put that into the same fund, their money would have grown to £3,523.32.

Suter added: “Suffice to say the vast majority of Premium Bond holders will not have been anywhere near those levels, and would likely have stood to benefit significantly had they put their money in investments rather than letting it gather dust in a Premium Bonds account during that time.

“These figures once again prove that although you need to be in it to win it when it comes to Premium Bonds, unless you’re willing to stuff the accounts with tens of thousands of pounds, you’d be better off swapping ERNIE for FTSE.”

Read our article on saving vs investing for more on how the two strategies compare.

Nationwide has launched two new savings products and boosted rates on four of its fixed-rate ISAs.

The new 1 Year Single Access ISA and 1 Year Single Access Saver are both hitting the market from today (6 March), offering a 4% interest rate.

The Single Access ISA does what it says on the tin – customers can only make one withdrawal before the interest rate drops. If you access the money more than once, you’ll be penalised with an interest rate of 1.05%.

The interest rate on the account is variable so could change over the one-year term. At the end of 12 months, your money is moved into an instant access cash ISA. You will be told what the new interest rate will be before your cash is transferred.

The Single Access Saver is effectively the same account but any interest earned is taxable, so you could be taxed on it if you breach your personal savings allowance. Make more than one withdrawal and your interest rate will be reduced to 1.05%.

Nationwide is also increasing the interest rates on four fixed-rate ISAs from 6 March: its 1 Year, 2 Year, 3 Year and 5 Year Fixed-Rate ISAs. The 1, 2 and 3 Year ISAs’s new rates are 4.05% while the 5 Year now has a 4.25% interest rate.

The building society is pulling its existing 1 Year Triple Access ISA and 1 Year Triple Access Saver, both offering a 3.30% interest rate.

Richard Stocker, head of savings at Nationwide, said: “We’re pleased to be increasing rates across our ISAs and our instant access savings product, giving members even more long‑term value and meaningful benefits.”

How do the savings accounts compare?

None of these six Nationwide savings accounts are offering the best savings rates on the market, based on our research of data available from Moneyfactscompare.co.uk.

However, they are still fairly competitive, while some have the best rates in terms of those offered by the major banks and building societies.

It’s also worth considering other factors when deciding whether to open a savings account with a bank or building society. For example, if you want to bank with a provider that has a physical branch near you, Nationwide has pledged to keep all remaining branches open until at least 2030.

Our calculations are based on someone depositing £10,000 into one of the savings accounts, and all accounts we’ve mentioned below are FSCS-protected.

How Nationwide’s 1 Year Single Access ISA - 4% rate compares

Trading 212, Plum and Moneybox are all offering easy-access cash ISAs with rates of 4.54%, 4.53% and 4.52%, respectively.

Trading 212 and Plum allow for unlimited withdrawals while Moneybox lets you take out cash three times a year before penalising you with a lower rate.

Across the well-known banks and building societies, Nationwide’s 1 Year Single Access ISA is around the top of the market.

Harpenden Building Society is offering a Single Access Cash ISA at a more competitive 4.06% while Aldermore’s Single Access Account comes with a 4.11% rate.

How Nationwide’s 1 Year Single Access Saver - 4% rate compares

Tembo Money and Chip are both offering easy-access savings accounts with better rates than Nationwide’s 1 Year Single Access Saver.

The rates on their products are 4.55% and 4.20%, respectively, and both allow for unlimited withdrawals.

Across the big banks and building societies, Nationwide is close to the top, with Yorkshire Building Society offering a Four Access eSaver at 4.05% and Tesco Bank an account with a 4.06% savings rate.

How Nationwide’s fixed-rate ISAs – 1, 2, 3 (4.05%) and 5 Year (4.25%) – compare

The four fixed-rate ISAs Nationwide has boosted interest rates on are all close to top of the market, and in some cases market-leading across the main high street banks and building societies.

The 5 Year Fixed-Rate ISA is beaten only by Chetwood Bank which is offering 4.26% on its 5 Year Fixed Rate Cash ISA, but Nationwide’s rate is the best out of the well-known high-street banks.

Why is Nationwide increasing its savings rates?

Banks and building societies often compete fiercely for customers’ business in the run up to the end of the financial year when ISA allowances run out.

With 2026/27 the final year under 65s can deposit up to £20,000 into a cash ISA, before the limit drops to £12,000 for cash ISAs, the end of this financial year is “already gearing up to be particularly competitive”, said Caitlyn Eastell, personal finance analyst at Moneyfactscompare.

The Iran conflict could also be prompting providers to adjust their rates as well, as there’s speculation interest rates are less likely to fall, because inflation could rise amid the tensions.

Eastell said: “Given the falling expectations of a [Bank of England] base rate cut, rates may remain higher for longer and providers may even choose to offer even more competitive deals.”

Two Premium Bonds holders will have a spring in their step after winning the top £1 million prize in NS&I’s March draw.

The first lucky jackpot winner is from Liverpool, holding a winning bond number of 496VT504601. The second winner from Norfolk has a winning bond number of 282NN327573.

The Liverpool winner bought their winning bond in April 2022 while the Norfolk champion bought theirs in September 2016.

While not everyone won the top prize in this month’s Premium Bonds prize draw, more than two million bagged £25, with 78 winning £100,000 and a further 156 winning £50,000.

Meanwhile, 313 won £25,000 while 782 won £10,000 and 1,563 bagged £5,000.

Andrew Westhead, NS&I retail director, said: "Spring has well and truly arrived for two Premium Bonds holders in Liverpool and Norfolk, who are each celebrating a £1 million win this March.”

How many people won in the March 2026 Premium Bonds prize draw?

More than £410 million worth of Premium Bonds prizes are being handed out in March’s prize draw.

This brings the total value of all Premium Bonds prizes won since the first draw in June 1957 to March 2026 to £40.3 billion.

Below is the breakdown of prizes for this month’s draw:

The current odds of winning in each monthly prize draw, for every £1 bond held, are 22,000 to one. This will drop to 23,000 to one from April when NS&I reduces the chances of winning.

How to check if you’ve won a prize

The Premium Bonds £1 million prize winners are announced on the first working day of each month. Jackpot winners can expect a visit from Agent Million, NS&I’s anonymous employee, who travels up and down the country informing people they have won.

Premium Bonds holders can check if they have won other prizes ranging from £25 to £100,000 the day after the first working day of each month via the Premium Bonds prize checker app or by visiting the NS&I website. For this month’s draw, this is Tuesday, 3 March.

Make sure you’ve got your Bond or NS&I number to hand so you can access your account.

If you’ve got Premium Bonds but haven’t checked to see if you’ve won anything in a while, it’s worth checking now.

NS&I says over 99% of prizes have been paid to winners since draws began in 1957, but there are still millions of unclaimed Premium Bonds prizes.

The government-backed savings provider says there are currently 2,733,973 prizes worth more than £116 million that haven’t been claimed.

We look at the alternatives to Premium Bonds in a separate piece.

Savings accounts have battled their way back onto Brits’ radar, offering attractive rates to beat the Bank of England’s base rate and inflation. But when it comes to getting more bang for your buck, they have some stiff competition from tax-efficient pensions, for those who already hold an emergency savings pot.

Inflation is slowing, with the latest data for January putting CPI inflation at 3%. Consequently, the Bank of England is gradually reducing the base interest rate – it is currently 3.75%, with the next BoE decision due on 19 March.

The best cash savings account rates are currently around 4.5%, and many households feel they are finally being rewarded for holding cash.

However, for higher- and additional rate taxpayers, a significant portion of those gains can disappear once tax and inflation are factored in, according to new analysis from Standard Life.

Even at inflation-beating best buy rates, higher rate taxpayers could lose over two-thirds of their savings gains to HMRC and the creeping increase in the cost of living, the number crunching found.

Mike Ambery, retirement savings director at Standard Life, said: “Higher interest rates can lull people into thinking their cash is working harder than it really is.

“Frozen income tax thresholds are pushing more people into higher income tax brackets each year and the amount of interest lost to tax could come as quite a surprise, especially with inflation to consider too.”

Bear in mind, in this article we are assuming you already have a healthy emergency savings buffer of between three and six months outgoings, which is what the experts recommend.

The impact of tax on savings

Many savers make use of ISAs to keep all of the gains they make from savings interest. But those who have already used the full £20,000 annual ISA limit and are now holding cash in taxable savings accounts, may face a much larger bill than expected due to the savings tax trap.

With income tax bands frozen until 2031, more people are moving into higher and additional rate brackets each year – in what’s known as fiscal drag – making tax on interest a growing issue for households who may not realise they’re affected.

Once your savings interest exceeds tax-free allowances, it is taxed at your marginal income tax rate, so 20% for basic rate taxpayers, 40% for those in the higher band and 45% for additional rate taxpayers. From April 2027, this jumps to 22%, 42% and 47% respectively.

Higher rate taxpayers only need around £11,000 in a non-ISA cash account earning 4.5% interest before their £500 personal savings allowance (PSA) – the amount of savings interest they can earn tax-free – is used up and interest begins to be taxed. Even before inflation is considered, this reduces returns significantly.

For higher rate taxpayers with larger amounts held outside an ISA in taxable accounts, the benefits of even the best buy cash savings rates are eroded away further by tax and inflation.

For a higher rate taxpayer holding £30,000 in a taxable savings account, for example:

• £1,350 interest is earned at a 4.5% rate
• After the personal savings allowance is used up and tax applied, this falls to £1,010
• After allowing for 2% inflation, the real gain is just £402

Basic rate taxpayers, who have a bigger £1,000 personal savings allowance, need around £22,000 in a top rate savings account to incur a tax bill. By comparison, additional rate taxpayers pay tax from the very first £1 of interest because they have no PSA at all.

The impact of tax relief on pensions

On a purely numbers basis, when measuring the gains on savings accounts next to pensions, there is really no competition – although you must be willing to lock your money away for a long time.

Pension contributions are one of the most tax-efficient ways to save, for those able to take a longer-term view with their money.

Higher and additional rate taxpayers, in particular, benefit from higher tax relief, giving their contributions a significant immediate boost.

For example, the same £30,000 invested into a pension could lead to a gain after one year of £21,103, according to Standard Life analysis, assuming 5% annual investment growth, 40% tax relief on the whole £30,000 and allowing for 2% inflation.

This is more than 52 times greater than the returns on a taxable cash account, and without any immediate income tax bill.

Pensions are usually taxed as income as they are withdrawn, beyond the 25% tax-free lump sum.

Source: Standard Life. Inflation calculated on the value after tax on interest and charges for taxable cash account and ISA, and after tax relief, investment growth and charges on the pension. Up to £20,000 each year can be deposited in an ISA.

Ambery, from Standard Life, said: “While ISAs are a solid tax‑efficient option, pensions are where the tax system truly works in your favour. For a higher‑rate taxpayer, a qualifying £30,000 contribution can instantly become £50,000 through tax relief. If you’re planning for the long-term, that head start is incredibly difficult for cash savings to compete with.”

Pensions vs savings: Which is best for my money?

The quick answer is a pension will give you a much higher return on your money than even large sums in some of the best paying savings accounts – although you won’t have access to it in the short-term. But the real answer is, if you can, have both.

A savings account might work better for you if you need access to your cash quickly, for example if it is where you keep your emergency fund. By comparison, pensions are savings for the long term, so you’ll need to be willing and able to tie your money up until at least age 55 (rising soon to 57) before you reap the benefit.

Premium Bonds are set to provide lower average returns as National Savings and Investment (NS&I) will cut the prize fund rate and reduce the chances of winning in the monthly prize draw.

From the April Premium Bonds prize draw onwards, the prize fund rate, which represents the rate of return for a bondholder with average luck, will be slashed from 3.6% to 3.3%.

This will mean the total amount of money distributed among Premium Bonds winners in the April draw will fall to around £375 million, down from around £408 million in the February draw.

NS&I estimates that the lower prize fund rate will mean there will be fewer Premium Bonds prizes overall, falling from February’s total of 6,183,066 to an estimated total of 5,943,029 in April.

The number of prizes available is set to fall in almost every denomination. However, the number of £25 prizes up for grabs will increase from 2,643,007 to an estimated 2,806,003 in April, while the number of £1 million prizes will remain at two a month.

It will mark the sixth time the prize fund rate has been cut since September 2023, when it stood at a recent high of 4.65%. The most recent rate cut was in August 2025.

At the same time, the chances of winning a prize will be cut to 23,000 to 1 from April onwards. The current odds are 22,000 to 1, and have been the same since December 2024.

These changes together mean that the average Premium Bonds holder with normal luck will both win less often and see smaller average returns on their money.

Remember, Premium Bonds prizes are allocated entirely at random, meaning some luckier savers will get more than the prize fund rate implies, and some will achieve less.

Andrew Westhead, retail director at NS&I, said: “This change to the Premium Bonds prize fund rate and odds reflects changes in the wider savings market, and ensures we continue to balance the interests of savers, taxpayers and the wider financial services sector.

A table showing the Premium Bonds prizes distributed in the most recent prize draw compared to the estimated distribution in April’s draw can be found below.

Source: NS&I, 24 February

What is the Premium Bonds prize fund rate?

The Premium Bonds prize fund rate is an unusual measurement for the returns you may get on your savings.

Unlike a traditional interest rate which tells you how much guaranteed growth your savings will achieve in a year, the prize fund rate only tells you how much growth the savings of someone with average luck can expect from Premium Bonds prizes in a year.

As prizes are distributed entirely at random, savers will achieve higher and lower average returns than the prize fund rate.

NS&I uses the prize fund rate as a benchmark to determine how many prizes should be given away each month, and what size they should be. When it goes down, they will reduce the total amount of money paid out in a draw.

Are Premium Bonds still worth it?

With the chances of winning going down and the prize fund rate being slashed, the question of whether Premium Bonds are still worth it is raised.

Mark Hicks, director of active savings at Hargreaves Lansdown, said the prize fund rate cut “serves as a timely reminder as to whether you can get more for your money elsewhere.

“Premium Bonds don’t pay out interest – their prize rate is more of a benchmark of average return for your money. However, the reality is that, if you don’t win anything, you don’t get anything at all. It’s well worth looking at the wider savings market to see what deals are available.”

Most savers with average luck who have not used up their entire ISA allowance could get higher, and much more predictable, returns by putting their cash into one of the top cash ISAs on the market, paying up to 4.32%.

Money that grows within an ISA is also protected from tax, just like winnings from Premium Bonds, meaning you are not exposed to any extra tax liability.

If you have used up your full ISA allowance, then putting money in Premium Bonds may make more sense, but research shows that winnings are heavily skewed in favour of wealthier people as the more money you hold in the savings vehicle, the more likely you are to win.

A Freedom of Information request sent to NS&I by AJ Bell in April 2025 found that around 63% of Premium Bonds holders have never won a single penny from the monthly prize draws.

It also found that while the average holding for those who have never won a prize was just £106.79, the average holding for a winner was £23,397.

With the chances of winning reducing, and the total prize pot being slashed, Premium Bonds are set to become a much less competitive product in the savings market.

This being said, there are still some situations where putting your money in Premium Bonds could be worth it.

As mentioned above, if you have used up your entire ISA allowance and still have a lot of cash left over, putting it in Premium Bonds could be a good way to let it grow without having to pay any tax.

The caveat here is that this is probably only worth it if you have a truly significant amount of money sitting around.

One of the best ways to protect your cash and investments from the taxman is by making sure you hold them in an ISA.

An ISA is a type of savings or investment account that acts as a tax wrapper, protecting your savings interest or investment returns from the taxman.

A stocks and shares ISA can protect you from capital gains tax and dividend tax, making sure that you keep all your returns.

ISA season typically runs from February to the start of the new tax year in April, as savers and investors are encouraged to utilise their annual ISA allowance. But how much do you know about the popular tax-free accounts? Test your knowledge in MoneyWeek’s ISA quiz.

Did you know as much about ISAs as you thought you did? Share your results on social media.

For all the latest ISA news, and much more, subscribe to MoneyWeek’s newsletters.

• How to find the best stocks and shares ISA
• Isas vs savings accounts: what’s the best home for your cash savings?
• 'I've used my annual ISA allowance. How can I shield my savings from tax?'

With the end of the 2025/26 tax year approaching on 5 April, now is the time to make full use of your current £20,000 ISA allowance and start thinking about what to do with the next allowance when it resets on 6 April.

Stocks and shares ISAs provide investors with a home to grow money free of any tax on the gains, which can be significant. Those who invested the full ISA allowance every year into the FTSE All-Share Index from when ISAs launched in April 1999, for example, would have a portfolio worth £665,696 over the 26 years to April 2025, according to calculations by Interactive Investor (having contributed £326,560).

Picking the right investments for your stocks and shares ISA portfolio is key – ideally you should balance your attitude to risk, the types of investments you already hold and where you are in your investment learning curve.

MoneyWeek asked investment experts at fund platforms Fidelity International and Interactive Investor for their top ISA fund and ISA investment trust picks, to suit different types of investors.

Investing for growth

Growth investing is a strategy focused on capital appreciation – that is buying stocks in companies expected to grow in value at an above-average rate compared to the wider market.

Tom Stevenson, investment director at Fidelity International, who recently featured on the MoneyWeek Talks podcast, said: “Growth investing requires patience and a long-term mindset. Market volatility is inevitable, but staying invested and diversified gives your money the best opportunity to compound over time.”

From Fidelity’s Select 50 list, he highlighted four funds that offer different approaches to growth investing:

Dodge & Cox Worldwide Global Stock fund – a value-oriented global equity fund investing in established companies that appear undervalued but have strong long-term prospects. Its diversified international approach provides broad exposure beyond the largest US technology names.

Rathbones Global Opportunities fund – a concentrated global growth strategy targeting companies with durable competitive advantages and strong expansion potential. The fund focuses on identifying businesses with distinctive qualities and the ability to sustain growth.

Federated Hermes Asia ex-Japan – a regional fund investing in attractively valued Asian companies outside Japan. The manager seeks quality businesses that are currently out of favour but offer strong long-term upside potential.

Vanguard Global Small Cap Index fund – a passive strategy providing exposure to thousands of smaller companies across developed markets. Smaller companies can be more volatile, but they have historically offered attractive long-term growth potential for investors with a longer time horizon.

Reliable returns

Stocks and shares ISA investors seeking a reliable return might look at global equity income funds. Investing in dividend-paying companies across the globe, they have the potential for a growing income stream alongside long-term capital growth.

Global equity income funds often lean towards financially robust, well-managed businesses, a great match for anyone who loves the idea of steady earnings but still wants exposure to global markets.

Dzmitry Lipski, head of funds research at Interactive Investor, suggested the Fidelity Global Dividend fund, which has been managed by Dan Roberts since its 2012 launch, drawing on more than two decades of dividend-investing experience.

“It invests in companies globally that offer a healthy dividend yield and the potential for capital growth and aims to generate roughly 25% more income than its benchmark,” said Lipski.

The portfolio holds around 46 large, resilient companies, with Europe representing roughly 48%, North America 26% and the UK 15%, and no Chinese exposure. Lipski said: “Sector allocations are deliberately defensive, led by financials, industrials and consumer staples.”

Alternatively, Jemma Slingo, pensions and investment specialist at Fidelity International, said she likes Pyrford Global Total Return – about two thirds of the portfolio is in high quality bonds, and a third is in equities.

“It tries to keep volatility low, while providing a stable stream of inflation-beating returns,” she said. Slingo said that, while at first glance at the fund’s performance chart reveals few serious falls, “on the flip side, growth has been fairly muted particularly when inflation is accounted for”.

Pyrford has turned an initial investment of £1,000 into £1,440 over the course of the decade. If you want a ‘sleep at night’ option, however, this might be a trade off you’re willing to make.

Stevenson, from Fidelity International, added: “Dividend and interest allowances have reduced significantly in recent years, so sheltering income-producing investments from tax in an ISA can improve the net yield you receive.

“Income investing doesn’t mean sacrificing growth altogether. Many income funds aim to provide a balance of regular distributions and long-term capital appreciation.”

From Fidelity’s Select 50, Stevenson’s three picks offering diversified sources of income are:

M&G Corporate Bond fund – a fixed interest fund investing primarily in investment grade corporate bonds, with the flexibility to hold government and high yield debt.

International Public Partnerships Ltd (LON:INPP) – a specialist infrastructure investment trust investing in essential assets such as schools, hospitals, transport and renewable energy projects. These assets typically benefit from long-term contractual cash flows.

Ninety One Diversified Income fund – a multi-asset income fund investing across bonds, dividend-paying equities, infrastructure and property. Managed with a focus on limiting volatility relative to the UK stock market, the managers John Stopford and Jason Borbora-Sheen have a long track record running this strategy and have successfully been able to limit capital losses while providing a steady yet growing income.

Adventurous diversification

With global stock markets becoming increasingly concentrated and growing fears of the AI theme potentially being overheated, those wanting to spice up their stocks and shares ISA portfolio with some interesting diversification could take a look at investment trust Murray International.

Kyle Caldwell, funds and investment education editor at interactive investor, said he likes the trust because he is “looking more towards those investment trusts that use their full global remit in having a good chunk of exposure to Asia Pacific and Latin America – Murray International ticks this box”.

The portfolio is very different from the wider market. It has a value investment style, and it offers an above average dividend yield of around 4%, Caldwell pointed out.

Fidelity’s Slingo is also concerned about the stock market being dominated by a handful of US technology stocks – and also likes Latin America and Asia, but this time in the form of the Lazard Emerging Markets fund.

“The fund seeks out companies that are cheaper than the market but that have better fundamental prospects,” she said, adding emerging markets were among the best performing equity assets last year and the outlook remains positive.

“Strong earnings growth, a weak US dollar and a rotation out of the US could all boost performance this year,” Slingo said.

Newer investors

For newer investors who would like something a little more interesting than a global tracker fund and who are nervous about jumpy markets, the Fidelity Global Dividend fund could be a good option.

“It invests in companies from around the world; offers a combination of growth and income; and aims to keep volatility lower than the wider market. The fund has delivered steady gains over the past 10 years,” Slingo said.

The fund contains some well-known names like Unilever and National Grid, Slingo added, so “new investors will know that buying the fund means buying real businesses that impact them”.

Alternatively Lipski at Interactive Investor highlights a managed solution, like Interactive Investor’s Managed ISA, might be a good place to start, where the investments are chosen for you.

Investors fill out a questionnaire and are matched with one of 10 portfolios – in two styles (index investment style and sustainable investment style) and five different levels of risk. Once invested, the portfolio is periodically rebalanced – in line with the risk level you signed up for.

The fund fees are low, and there is no separate management fee as it sits within Interactive Investor’s existing flat-fee subscription-based charging model.

We look at the best investment funds for beginners and the best investment platforms for beginners in separate articles.

A less experienced investor may also want to look at absolute return or capital preservation funds. They use a mix of strategies to limit volatility and help protect against big downturns.

Lipski suggested looking at the Trojan Fund: “Co-managed by Sebastian Lyon and Charlotte Yonge, Trojan Fund takes a conservative, disciplined approach focused on preserving capital and delivering long-term real returns,” he said.

Lyon invests across a broad range of asset classes. The equity portion is focused on large, financially robust companies in developed markets, particularly the UK and US. The fund also holds high-quality sovereign and inflation-linked bonds as defensive assets, alongside a strategic allocation to gold. Cash is also used meaningfully to protect capital and allow swift investment when opportunities arise.

“The fund offers a steady, defensive option for investors seeking long-term real returns with controlled risk,” said Lipski.

Experienced investors

More experienced investors may want to consider smaller companies for their stocks and shares ISA. “These can be significantly riskier than large ones,” Fidelity’s Slingo pointed out, “however, experienced investors with long time horizons might want some exposure to this part of the market”.

Slingo suggested the Brown Advisory US Smaller Companies fund. “It deploys a big team of researchers to find the most promising smaller companies listed in the US. Their strategy is based on the belief that good fundamental research coupled with a long-term approach can generate attractive outperformance,” she said.

The fund is a higher risk option, and its performance has lagged the benchmark in recent years. “However, it may appeal to experienced investors who are concerned about the dominance of huge US tech stocks in their portfolios,” said Slingo.

Finally, according to Dave Baxter, senior fund content specialist at Interactive Investor, another good option for the more seasoned investor is the Marlborough Special Situations fund.

It invests in the dynamic growth potential of the UK’s innovative and agile smaller companies. Its sector bets are markedly different with big weightings to industrials, consumer discretionary shares and technology. Top holdings include Zegona Communications, Boku and SCA Investments.

Baxter said: “Marlborough Special Situations has been poor in 2025, and in recent years. The fund has more than 150 holdings and small position sizes, with its top holding making up only 2.6% of the portfolio.

“However, the fund has a good long-term record, and good exposure to micro caps, small caps and mid caps. It should in theory do better when interest rates fall in earnest.”

Junior ISAs (JISAs) are emerging as an effective inheritance planning tool amid impending pension inheritance tax changes.

The inheritance tax system is facing an overhaul in the coming years, with pensions forming part of taxable estates from April 2027.

The House of Lords last week criticised the pension changes but many people are now looking to find ways to pass on wealth to their loved ones in a more tax-efficient way to avoid giving too much unnecessarily to the taxman.

One option is for parents or grandparents to put money into a JISA - savings accounts for children under age 18.

Increasing numbers of people are making use of the full £9,000 JISA allowance, a Freedom of Information request by Murphy Wealth to HMRC found. The research showed 78,330 accounts maximised their allowance in 2023/2024, the most since 2019/2020’s 80,060.

It also marks a 9% increase on the previous tax year (71,910) and a 41% rise since 2020/2021 (55,570).

Adrian Murphy, chief executive of Murphy Wealth, said: “A lot of families are exploring different ways of passing down wealth to their loved ones earlier in life.

JISAs are a great way of doing that, providing tax-free growth and income that can compound over a significant period of time.

“With pensions becoming part of people’s estates from next year – the decision about which wouldn’t be reflected in these figures, as it was announced in the Autumn 2024 Budget – we would expect to see a further acceleration in the number of JISAs being maximised.”

The benefits of a JISA for inheritance planning

There are lots of ways to pass on money to your grandchildren or children.

Pension wealth is set to form part of an estate for inheritance tax purposes from April 2027, which may affect how much can be passed on.

You could give financial gifts during your lifetime but, if they exceed inheritance tax gift allowances, there are risks of a tax bill if you pass away within seven years of the transfer.

JISAs provide another tax-efficient way that parents and grandparents can give their loved ones a financial boost.

You can gift up to £3,000 a year, either to one person or several people, without the money being liable for inheritance tax. If you don’t use all your allowance, anything left carries over into the next year, but only for one year. So you could technically put £6,000 into a JISA.

Murphy added: "Children can't access the accounts until they are 18, which also provides a level of assurance that the money will be used for some of the big life events that take place around that age – whether it's buying a first car, help with university costs, or taking that first step into a career or onto the property ladder.

“And the people making the contributions will likely get to see their child or grandchild enjoy that money, which may not be the case with other ways of tax-efficiently passing wealth down.”

Alice Haine, personal finance analyst at Bestinvest, highlights that the tax benefits mirror those of an adult ISA – with no capital gains or income tax.

But there are other advantages. She said: “JISAs sidestep the parental tax rules.

“If a child earns more than £100 in interest on money gifted by a parent and held in a regular savings account, that income is taxed as if it were the parent’s – an issue that does not apply to JISAs. Parents should tread carefully, however. There’s no point topping up a JISA if they might require the money for their own needs, because they can’t get it back.”

However you plan to pass wealth onto family members, Murphy said it’s important you have a plan and don’t leave yourself short.

He added: “Speak to a financial adviser who can provide guidance on how to sustainably gift money to children and grandchildren, while ensuring your financial requirements are taken care of in retirement.”

There may still be a couple of weeks until Valentine’s Day but two Premium Bonds holders are already feeling the love after each winning a £1 million jackpot prize.

The lucky bond holders, from central Bedfordshire and Liverpool, will have been contacted by NS&I's Agent Million to tell them they have banked the top prize this month.

The first jackpot winner, from central Bedfordshire, won with the bond number 489TB013219. They purchased the winning Bond in February 2022 and hold £50,000 in Premium Bonds. They are the second jackpot winner from central Bedfordshire.

The second Premium Bonds £1 million jackpot Bond number is 040QJ919368. It is held by someone in Liverpool.

They also hold £50,000 in Premium Bonds and purchased their winning Bond in October 2004. They are the fourth to win the £1 million jackpot in Liverpool.

Andrew Westhead, NS&I Retail Director, said: "Congratulations to our two jackpot winners from central Bedfordshire and Liverpool, who each start February £1 million richer. ERNIE has spread the love ahead of Valentine's Day and we hope this brings both winners and their loved ones plenty to celebrate.”

Test your NS&I knowledge with MoneyWeek's Premium Bonds quiz.

How many people won in the February 2026 Premium Bonds prize draw?

In February 2026, there were more than 6.1 million tax-free Premium Bonds prizes worth over £408 million up for grabs.

This brings the total won by Premium Bonds holders since the first draw in 1957 to £40 billion.

Premium Bonds prizes range from £25 up to the jackpot £1 million.

Some 78 people won £100,000 each this month, while 154 received £50,000, 311 will get £25,000 and £777 are due £10,000.

How to check if you’re owed a prize

The Premium Bonds £1 million prize draw winners are announced on the first working day of each month. You will be contacted and told if you have won the top prize.

Bond holders can check if they have won anything between £25 and £100,000 by using the Premium Bonds prize checker app or visiting the NS&I website the day after the first working day of each month. For this month’s draw, this is Tuesday 3 February.

To check for Premium Bonds prizes on the NS&I website, Bond holders will need their Premium Bonds holder’s number. Those using the Premium Bonds app can use their holder’s number or their NS&I number.

It is worth checking as currently there are 2,713,707 unclaimed prizes worth £114,769,950 waiting to be claimed.

In central Bedfordshire, there are currently around 10,400 unclaimed prizes worth £433,225 dating back to February 1968. The largest unclaimed prize in central Bedfordshire is worth £10,000 and was won in the January 2024 draw by a Bond holder with a holding of £100.

In Liverpool, there is a £5,000 prize from May 2023 yet to be claimed; this is currently the highest unclaimed prize in the area.

There are also 13 unclaimed £1,000 prizes dating back to November 1987.

The prospect of winning a top cash prize each month is exciting but the prize rate has dropped in recent months and your money could perform better elsewhere.

We look at the alternatives to Premium Bonds in a separate piece.

“I’ve stopped paying into my Lifetime ISA now. I don't think it's worth it,” a friend explained. The rest of the group, mostly renters in their early 30s, nodded in support as she explained her plight – the property cap (which has been frozen at £450,000 since the Lifetime ISA launched in 2017) is becoming more and more restrictive if you want to buy in London. The increasing likelihood of paying an effective 6.25% penalty on your hard-earned savings if your dream home exceeds this threshold makes the account much less appealing – putting money elsewhere gives you more choice.

I remember discussing the Lifetime ISA (LISA) when it first launched, almost a decade ago, with a group of friends who were long term renters in the capital. It was replacing the Help to Buy ISA, and the Lifetime ISA seemed to be a welcome improvement.

Each tax year, you can save up to £4,000 in a Lifetime ISA and get a 25% (up to £1,000) boost from the government. With the Help to Buy ISA, which you can no longer open, you can pay in £200 a month and also get a 25% top up, but the overall maximum bonus is £3,000.

I ran the calculations – if you could afford to max out your Lifetime ISA for more than three tax years, you would end up with a greater bonus via the Lifetime ISA. Plus the 25% boost is paid into your account the following month, rather than needing to be claimed when you come to purchase, so you can benefit from compound interest (you can hold cash and/or stocks and shares in Lifetime ISA).

To get the Help to Buy ISA bonus, the purchase price of a property is capped at £250,000, or £450,000 in London. With the Lifetime ISA, it’s a blanket £450,000.

When the Lifetime ISA launched in April 2017, the average UK house price was £220,094, according to HM Land Registry. In London, the average was £482,779. But as of November 2025, the average UK house price is £271,188, and £553,258 in the capital.

While house prices have risen, the Lifetime ISA cap has failed to keep pace. If it had been uprated, the limit would have grown to £575,550 according to AJ Bell calculations in February 2025. This restricts prospective buyers who face fewer affordable options that fall within the Lifetime ISA boundaries.

Plus, bizarrely, the £450,000 cap doesn't align with first-time buyer's relief on stamp duty land tax (SDLT) – which applies on properties costing up to £500,000. As a first-time buyer you pay no SDLT on the first £300,000 then 5% on the portion from £300,001 to £500,000. Surely it’s time to uprate the Lifetime ISA property value limit to be at least in line with this relief.

How Lifetime ISA withdrawals work

Lifetime ISA withdrawal rules are stringent. You can access the cash penalty-free if you’re buying an “authorised” property (you’re buying a property costing £450,000 or less, with a mortgage, using a conveyancer or solicitor and you first paid into the Lifetime ISA at least one year ago) or if you’re 60 or older. Otherwise, unless you’re terminally ill with less than 12 months to live, you will be charged 25% on withdrawals.

Let’s say you put in £16,000 over the years. With the £4,000 bonus, you’d have £20,000, assuming no growth. You then want to buy a property for £500,000, so withdraw the entire pot. As this is just over the Lifetime ISA cap, you would pay a 25% withdrawal charge of £5,000 – leaving you with just £15,000. This works out at an effective 6.25% penalty on your savings.

A withdrawal charge is understandable given the 25% top up is applied within the tax year, but cutting it to 20% would mean HMRC can recoup the bonus if it’s not used to buy a first home. We don’t need an entirely new ISA product for that – the rate was cut to 20% during the coronavirus pandemic.

The rumoured Lifetime ISA replacement

In the 2025 Autumn Budget, chancellor Rachel Reeves announced the government will publish a consultation in early 2026, on the “implementation of a new, simpler ISA product to support first time buyers to buy a home”. It’ll be offered in place of the Lifetime ISA. It’s promising news – Lifetime ISA reform is long overdue. But HMRC this week suggested the consultation will focus on launching a new product which removes the retirement saving aspect of Lifetime ISAs and the withdrawal charge.

It seems the new product, reportedly due to launch from April 2028, will return to the Help to Buy ISA model, where the bonus is applied when the property is bought. This should “be cheaper” for the government, but potential homeowners would lose out on the “investment growth earned on the bonus during the years they save for their first house”, Rachel Vahey, head of public policy at AJ Bell, points out.

It’s not yet known whether the property value threshold will be changed. I really hope it is. If it remains frozen, the government would be ignoring the main problem with the Lifetime ISA and missing a huge opportunity to genuinely help first-time buyers get on the property ladder amid rising house prices.

I believe the Lifetime ISA is a great product for prospective homeowners, but it’s failing because the property cap hasn’t kept up with house price growth. First-time buyers are being restricted to fewer options as property prices rise, and the frozen threshold is undermining confidence in the product. Why would you commit to locking your savings for a deposit in a Lifetime ISA if you were likely to lose a chunk of the money you put in to buy your first home?

Fixing this flaw by uprating the limit is a fantastic opportunity for the government to win support from millennials and Generation Z. Launching a new product which doesn’t address the frozen threshold would just be a huge waste of time and taxpayers’ money.

Lifetime ISAs (LISA) are set for the biggest shake-up since their introduction in 2017, with the government set to consult on a “simpler” replacement ISA.

The product will be exclusively focused on first-time buyers, dropping the retirement saving option currently available, CityWire reports. The new ISA could launch in April 2028, according to the publication.

Under current rules, Brits can put up to £4,000 a year into a Lifetime ISA and the government adds 25%, up to a maximum of £1,000 per year. The £4,000 must be within the overall £20,000 annual ISA allowance. You can hold cash or stocks and shares in a LISA.

You can then use the money to either contribute towards a down payment on a property worth up to £450,000, or save the money and withdraw it fee-free once you reach 60 years old.

If you withdraw money from your LISA for anything else, you have to pay a 25% exit penalty, unless you are terminally ill, with less than 12 months to live.

Under the proposed rules, the 25% bonus would reportedly be paid when an individual withdraws their cash to buy a property, rather than paid monthly. As the bonus would be paid at the point of purchase, it’s expected there wouldn’t be 25% exit penalties.

However, by not paying the bonus monthly, savers would not be able to make the most of compounding interest and investment returns on the government bonus. It could mean that future LISA-equivalent pots will be smaller over time compared to ones that benefit from the monthly payment system.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, told MoneyWeek that a potential removal of the retirement option was “disappointing as the LISA has the potential to be a gamechanger in helping groups such as the self-employed prepare for retirement”.

Chancellor Rachel Reeves said in her 2025 Autumn Budget that the government would launch a consultation on a “new, simpler ISA product to support first time buyers to buy a home” in “early” 2026.

A Treasury spokesman told MoneyWeek: “We recognise that the Lifetime ISA is not working for everyone, particularly when people's circumstances change. That is why we intend to consult on a new and improved product, specifically designed to support first-time buyers and without penalty for withdrawals.”

No word on property cap being scrapped

It is not currently known whether the £450,000 property price cap would be scrapped when the new ISA product launches.

This cap, which means savers have to pay a 25% penalty if they want to use their LISA to purchase a home just £1 over the limit, has been the subject of criticism by some who think it is not enough.

The average property in the UK cost £297,755 in December 2025, according to the Halifax House Price Index, meaning first-time buyers in most of the UK aren’t affected by the £450,000 limit.

However, those seeking to buy where house prices are typically more expensive, such as London, are much more pressed. The average price of a property in the capital is £539,086, almost £100,000 above the LISA cap.

With house prices this high, Londoners wanting to buy their first home with their Lifetime ISA bonus are much more restricted in which houses they can purchase.

Morrissey said: “The £450,000 limit for value of first homes bought with a LISA has been in place since the product was first introduced so there’s a strong argument that it needs to be increased given the house price inflation we’ve seen over that time.

“This needs to be addressed both in the consultation on what a new product would look like but also for the LISA as it currently stands. People are still using the LISA to help them get on the property ladder and it is vital that it remains fit for purpose for these people.”

In June 2025, the Treasury committee released a report that highlighted some problems with the current LISA regime. The report called the LISA “complex” and said it increases the risk of savers choosing “unsuitable investment strategies”.

The committee also criticised the confusion around the penalty incurred when LISA funds are withdrawn for something other than a house purchase under £450,000 or retirement.

They were less critical of the house price cap, however, saying that the current cap “ensures government spending supports those who need financial assistance the most”.

NS&I is to cut interest rates on two of its easy-access savings accounts, in another blow for savers.

The government-backed bank is reducing rates on its Direct Saver and Income Bonds products from 12 February.

It is the first time NS&I has lowered interest rates on the accounts since March 2025 and comes after the Bank of England reduced the base rate from 4% to 3.75% in December.

NS&I also said the reductions were being made to reflect changes in the wider savings market.

Matt McKenna, personal finance expert at finance comparison site Finder, said: “These cuts aren’t a surprise. NS&I already slashed the rates on eight of its fixed rate bonds at the start of January and now two of its easy-access savers will be impacted, following the general trend we’ve seen for variable savings rates after the base rate cut in December.”

We reveal who won the top Premium Bonds prizes in January here.

How will interest rates on the savings accounts change?

NS&I is lowering the rate on its Direct Saver from 3.30% AER to 3.05% AER on 12 February. The rate offered on Income Bonds will drop from 3.30% AER to 3.05% AER.

Both of the accounts are easy-access, but the Direct Saver can be opened with a minimum of £1 and can hold a maximum of £2 million. You can open an Income Bonds account with a minimum of £500 and can hold a maximum of £1 million.

Interest is paid yearly on the Direct Saver while it is paid monthly on the Income Bonds account.

How do NS&I’s savings accounts compare with other savings products?

Savers with a Direct Saver or Income Bonds can currently find better rates elsewhere, even before the change.

The top-paying easy-access product currently on the market is the Chase saver account, according to Moneyfacts. It offers a rate of 4.5% AER variable if you open a current account with the bank, including a bonus rate of 2.25% AER fixed for the first 12 months.

After that, Mansfield Building Society is offering a rate of 4.25% on its Triple Access Bonus Saver, including a 1% bonus for the first 12 months.

See our list of the best savings rates right now.

A major perk of NS&I savings products is that they are backed by the Treasury so 100% of your capital is protected.

Any money saved with NS&I is also used by the government to invest in the UK.

However, Sarah Coles, head of personal finance at Hargreaves Lansdown, pointed out that the FSCS now protects the first £120,000 per person, per banking licence, if a bank or building society goes out of business. This is up from £85,000 previously, meaning NS&I now has less of a pull for smaller-scale savers.

In any case, you want to ensure you are holding money in a savings account that is paying higher than the rate of inflation, which came in at 3.4% in December 2025, otherwise your cash is being eroded in real-terms.

A total of £872 billion is held in Britain’s ISA accounts, with almost £100billion of that added in the last year alone. I would hazard a guess that almost every subscriber to MoneyWeek magazine has one. Within an ISA, your money is completely free of income tax and capital-gains tax, and unlike with pensions, there is flexibility over when you can take it out. ISAs have become central to the way the British save and invest. With a £20,000 annual limit, it soaks up most of the spare money people have to put aside.

Now, they are starting to come under sustained attack. In the last Budget, chancellor Rachel Reeves reduced the amount that could be put into a cash ISA to £12,000 a year as of April 2027. There are reports that the taxman wants to go further and charge a 22% levy on cash assets held within a stocks and shares ISA, and is also looking at aligning the rate with income tax, so that 40% and 45% taxpayers would have to pay extra on any cash held in their ISA.

It sounds like an administrative nightmare. It will be hard for ISA providers to work out what percentage of a fund is in cash; whether a client is a standard or higher-rate taxpayer, or whether they have used up their dividend or personal allowances for the year. Some of the smaller firms, which may also be the most innovative, may simply decide it is no longer worth the hassle and give up. But the real problem is not just all the red tape that will now be imposed on a product that was designed for its simplicity. It is also the precedent.

The slippery slope with ISAs

The simple rule that the ISA is free of tax has now been breached and, once that taboo is broken, future chancellors can easily ramp up the tax levied on ISAs. After all, what counts as a cash holding? A money-market ETF? A bond fund? A high-yielding equity? The tax grab might start with simple cash balances, but it is not hard to see the reach getting extended, especially as clever fund managers come up with products that have all the characteristics of a savings account with a different wrapper. Perhaps only basic-rate taxpayers should be allowed relief on their entire holdings; or ISAs should be restricted to the holding of shares listed in Britain. Alternatively, perhaps there should be a £100,000 lifetime limit on contributions to an ISA, an idea already put forward by the Resolution Foundation, whose former boss, Torsten Bell, is now a Treasury minister. Or how about a special 10% income and capital-gains tax on any assets held within an ISA?

After all, the government is desperate to raise more money and is boxed in by its rash promise not to raise any of the three main taxes. That makes all the cash locked up in savings accounts a tempting target. After a few years, almost all the tax advantages may well have been stripped away.

Britain is returning to the 1970s

And yet that would be a tragedy. The ISA can be traced back to Nigel Lawson’s Personal Equity Plan first launched four decades ago. Gordon Brown put a new label on it, but it was basically the same vehicle. When it was started, it was part of the Thatcherite project to create a shareholding democracy. The theory was that if people owned shares, they would be independent of the state, it would increase the amount of capital available to British industry, and, perhaps most importantly of all, it would build support for free markets.

When industries were privatised, the shares were sold at a discount, and many people put them straight into their Pep/ISA and held onto them. If enough people had a stake in the system and were benefiting from it personally, then they were far more likely to be suspicious of higher corporate taxes or more regulations for business.

It is arguably the last surviving remnant of the Thatcher reforms of the 1980s. We no longer have a flexible labour market. Our rate of corporation tax is about average for Europe and no longer one of the lowest. Our top rate of income tax is punishingly high and kicks in at a very low level, while inheritance taxes are among the highest in the world. The trade unions are allowed to become steadily more powerful. With Great British Energy and Great British Rail, we are even renationalising major industries. The Labour government has now started to destroy the last relic of that era – and the British economy will complete its journey back to the dysfunctional 1970s.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Nationwide is cutting rates on 37 savings accounts after the Bank of England (BoE) lowered the base rate last month.

The building society is slashing rates by up to 0.25 percentage points from 10 February after ratesetters at the BoE reduced the base rate from 4% to 3.75% on 18 December.

Nationwide is reducing rates across a range of products, including its One-year Triple Access Online Saver, Flex Instant Saver and Smart Junior ISA Maturity.

Customers with a Flex Regular Saver, FlexOne Saver, Start to Save, Smart Instant Access & SmartSaver or Smart Limited Access savings account will see no change from 10 February.

Tom Riley, director of group retail products at Nationwide, said: “Although we’ve made reductions to a number of savings accounts, our range continues to pay more than the market average, giving savers every reason to put their money with Nationwide.”

What Nationwide accounts are affected?

Nationwide will reduce rates by between 0.15 and 0.25 percentage points on 10 February.

The headline rate on its Help to Buy ISA will drop from 2.5% to 2.25%, while its Continue to Save product will be lowered from 1.75% to 1.5%.

Its Limited Access One-year Triple Access Online Saver will drop from 3.5% to 3.3% while its Branch Instant Access Maturity savings account will go down from 1.45% to 1.25%.

Here is a full breakdown of Nationwide savings accounts which are having their interest rates lowered in February:

Source: Nationwide

¹ Flex Saver / Flex ISA: £0-£9,999.99 from 1.25% to 1.15%; £10K-£49,999.99 from 1.35% to 1.20%; £50K+ from 1.45% to 1.25%.

² Instant Access: £0-£9,999.99 from 1.10% to 1.10%; £10K-£49,999.99 from 1.15% to 1.15%; £50K+ from 1.35% to 1.20%.

What can affected Nationwide customers do?

If you don’t have a major sense of loyalty, you could ditch your Nationwide savings account and sign up for one paying a higher rate elsewhere.

Sophie Barber, analyst at personal finance comparison site Finder, pointed out Chase’s easy access savings account currently pays 4.5% AER interest. It’s available to those opening a current account with the bank and allows for unlimited withdrawals.

If you haven’t maxed out your ISA allowance for the 2025/26 tax year, you could also open a cash ISA.

The £20,000 annual cash ISA allowance is being reduced to £12,000 for under-65s from April 2027 so now could be a good time to sign up for one, Barber said.

Trading212 is currently paying 4.33% AER on its easy access cash ISA, while Plum and Moneybox are both offering cash ISAs paying 4.32% AER.

You could also sign up for a one-year fixed rate cash ISA with Shawbrook Bank paying 4.14% AER and lock your cash away.

Anna Bowes, savings expert from financial planning firm The Private Office, said cash ISAs could be a better bet than taxable fixed-rate bonds, if you’re someone with a lot of cash stashed away.

At the time of writing, the top one-year fixed rate bond is paying 4.55% AER, whilst the top one-year fixed rate cash ISA is paying 4.14% tax-free/AER.

For those who don’t pay tax on their savings, the bond was “clearly the winner”, Bowes said, as it would provide an extra £41 of gross interest for each £10,000 deposited.

However, those who are paying tax on their savings interest would actually do better opting for the cash ISA, by her calculations, as no tax would be owed on savings made within the cash ISA.

“The rate on the bond would fall to 3.64% after basic rate tax had been deducted, so a basic rate taxpayer with a deposit of £20,000 would earn £828 in the cash ISA, but just £728 from the bond, if they had already used their personal savings allowance,” Bowes explained.

Bowes also said Nationwide customers considering ditching their savings accounts should factor in whether it could make them ineligible for a Fairer Share payment this year.

The building society has issued the £100 payments to eligible customers each year since 2023 but hasn’t confirmed whether another will be paid in 2026.

If the Fairer Share payment returns this year, it is likely the eligibility criteria will be similar to 2025, when you needed to have a qualifying current account and qualifying savings account, or a qualifying current account and qualifying mortgage, open with the building society.

Savers have been dealt a new blow after National Savings and Investments (NS&I) cut rates on new issues of their popular fixed-term British Savings Bonds.

The state-owned savings bank today announced new issues of its one, two, three, and five year Guaranteed Growth and Guaranteed Income Bonds would go on sale with interest rates between 10 and 14 basis points lower than their previous issues.

The cuts only apply to new issues of the fixed-term bonds. Customers who put money into previous issues of NS&I’s British Savings Bonds will still receive the interest rate they initially agreed to.

The move comes just two months after NS&I bolstered savings rates on its savings bonds in November.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The autumn and winter tend to see more fixed rate accounts mature, so there’s always a risk that savers will take their money and leave. That was definitely a theme in September, when money was flowing out of NS&I.

“There’s every chance that this temporary boost was designed to stem the flow. There was actually a significant rise in savings in November, when £2.45 billion was paid into NS&I, so now those higher fixed rates have done the job, cuts were in order.”

NS&I has not changed any of the details relating to their Premium Bonds products. The annual prize fund rate is still at 3.6% after being cut in August, and the chances of winning remain at one in 22,000 per £1 Bond.

Guaranteed Growth Bond interest rates slashed

Guaranteed Growth Bonds pay a fixed rate of interest over a set period of time with interest calculated daily and added to the bond on each anniversary of the investment. They operate like most traditional fixed-term savings accounts as interest earned is reinvested.

The rates on all new issues of these bonds have been slashed by between 10 and 14 basis points.

A table showing the old and new interest rates on NS&I’s Guaranteed Growth Bonds can be found below.

Source: NS&I, 6 January

Guaranteed Income Bond interest rates cut

NS&I’s Guaranteed Income Bonds operate differently to the growth bonds as interest is not reinvested but instead paid to the bond holder.

They are a lump sum investment that pays out monthly income at a fixed rate of interest over the agreed period of time. Interest is calculated daily and is paid into the customer’s nominated bank account.

A table showing the old and new interest rates on NS&I’s Guaranteed Income Bonds can be found below.

Source: NS&I, 6 January

How do British Savings Bonds compare to other fixed-term accounts?

Though savers looking for a fixed-term deal will be left disappointed by the news, there are still many other competitive options available in the fixed-term market.

The top one year fixed term savings account from Union Bank of India (UK) pays a rate of 4.45%, according to Moneyfacts, while an account with the same term from Chetwood Bank will pay 4.26% interest.

While better deals are available on the market, NS&I is still offering an interest rate that is above the average for one year fixed term accounts.

The Guaranteed Growth Bond pays 4.07% interest and the Guaranteed Income Bond pays 4% interest – these are 23 and 16 basis points above the 3.84% average in the wider market, respectively.

Coles at Hargreaves Lansdown said: “The good news is that [NS&I’s] bonds are still offering more than they did before the November bump. However, the bad news is that they fall short of the most competitive deals in the market. The fixed rate market has held up impressively in the face of the Bank of England rate cuts – in part because the market isn’t expecting many interest rate cuts in 2026.”

As for bonds with longer terms, savers can still find better deals than those offered by NS&I. The top two year fixed account pays 4.16% interest, the top three year pays 4.21%, and the top five year account pays 4.31%.

As NS&I is a savings bank run by the government, the money you hold in its products is effectively 100% safe as your savings are guaranteed by the government. The only way your money could be in jeopardy is for the UK government to go bankrupt, which is incredibly unlikely to happen.

We list the best savings rates right now in a separate piece.

The allure of a 25% government top up was enough to persuade me to open a Help to Buy ISA in the late 2010s.

But fast forward to 2025 and I’ve decided to do away with the account and put my money elsewhere.

Having moved into my partner’s property last year, and therefore no longer looking to buy a first home, the account was effectively redundant.

Without the 25% bonus, and offering a paltry interest rate of 2.5%, I was losing money in real terms, based on the latest CPI rate of inflation.

Instead, I’ve put 80% of the Help to Buy money into a taxable cash savings account and transferred the remaining 20% into a stocks and shares ISA.

My cash savings account is currently paying over 4% in interest, offering far more than the Help to Buy ISA.

The interest I’ll make from the cash savings account will be well within my personal savings allowance for the 2025/26 tax year. At some point, I will transfer some or all of the money from this savings account into a cash ISA though, to protect it from the taxman.

The 20% I am adding to the stocks and shares ISA is an amount I can afford to lose. Because it’s in an ISA, any returns will be shielded from capital gains, dividend and income tax.

Moving the Help to Buy ISA money into cash savings and a stocks and shares ISA will mean my money will work harder and my returns should be stronger over the long-term.

I considered opening a Lifetime ISA, which also offers a 25% bonus from the government, as you can invest in stocks and shares with these accounts.

However, you only get that bonus if you’re buying a first home (which I no longer am) or withdrawing the money after the age of 60. If you withdraw your cash and it’s not for either of these two reasons, you are faced with a hefty 25% penalty.

I wanted a tax-wrappered account offering more flexibility than this, in case I want to withdraw my money earlier than 60 penalty-free – a stocks and shares ISA allows me to do this.

Millions ‘trapped’ with Help to Buy ISAs

More than two million savers are still stuck with Help to Buy ISAs, a recent Freedom of Information request made by comparison site Finder found.

These savers will not be able to add more money into their accounts after November 2029 and from November 2030, can’t claim the 25% bonus.

To qualify for the 25% bonus, you need to buy a house costing no more than £250,000 outside of London and £450,000 inside the capital. These limits have not changed since the Help to Buy scheme launched in December 2015, despite house prices rising by around 45% between September 2015 and September 2025, according to Land Registry data.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said the Help to Buy ISA could be a ‘real shot in the arm’ for would-be home buyers, but savers who no longer need to get on the property ladder will likely do better putting their money elsewhere.

“If your plans have changed, and you’re no longer buying, this account essentially becomes a savings account with a monthly cap.

“Given that the best rate on offer right now is 3%, it’s not a particularly competitive savings account, so a cash ISA would be a more sensible option. If you want the money for a longer-term goal, you might be better off with a stocks and shares ISA.”

Cuts to cash ISA allowance as Reeves pushes for an investment culture change

Rachel Reeves confirmed in the Budget the cash ISA annual allowance limit will be reduced from £20,000 to £12,000 for under 65s from April 2027. Savers will still retain the overall £20,000 annual ISA limit.

The chancellor is seeking to push more savers towards investing their money rather than relying on the less risky but typically less lucrative option of cash savings.

Her attempts to shift people’s attitude towards riskier forms of saving may not bear fruit though, research suggests.

Polling by AJ Bell found 51% of cash ISA savers would simply put their money into a taxable savings account following a cut to the annual cash ISA allowance.

However, while stocks and shares ISAs are a riskier way of saving, returns are often greater than stashing the cash away in a taxable savings account or cash ISA – if you’re looking to invest over a longer-term period of five years or more.

Analysis from AJ Bell shows a one-off £1,000 investment in the average North America fund back in April 1999, when ISAs were first introduced, would now be worth £6,285, compared to just £2,079 if held in the average cash ISA.

The investment platform found even UK equity funds, despite two decades of market challenges, would have grown the original £1,000 to £3,787, comfortably beating cash returns and inflation over the same period.

Laura Suter, director of personal finance at AJ Bell, said the figures revealed the “hidden cost of playing it safe”.

“Inflation quietly eats away at savings, and even the average cash ISA will have struggled to keep pace. By contrast, investors who were willing to take on some risk have been handsomely rewarded,” Suter said.

If you’re looking to open a stocks and shares ISA, bear in mind you may have to pay certain fees which can impact any gains you make.

You may be charged a platform or account fee, charged as either a percentage of your investment amount or as a flat amount each month or year. You may also have to pay trading or dealing fees each time you buy or sell an investment.

Make sure you read our guides on how to start investing and the best investing apps.

The household savings ratio has dropped to the lowest level since mid 2024 as high inflation appears to continue weighing on incomes, official data suggests.

The latest figures from the Office for National Statistics (ONS) show the household savings ratio – how much households save as a proportion of their income – fell to 9.5% in the third quarter of 2025. It stood at 10.3% and 10.2% in Q1 and Q2, respectively.

The dip coincided with inflation holding at 3.8% in July, August and September and was before the latest interest rates were cut. The ratio may fall further if savings rates drop, following the cut to the base rate on 18 December.

The figures suggest that households are still finding things tough even with inflation slowing.

Samuel Mather-Holgate, managing director at Mather and Murray Financial, said: ”Inflation is eating away at disposable incomes and people's ability to save, whether that's for a rainy day fund or the longer term.

"Coupled with lacklustre GDP growth, this data is a snapshot of a country that is on the rivet financially."

How much are households saving?

The ONS data shows household incomes are dropping, which appears to be having an impact on how much people are saving.

Real household disposable income per head decreased by 0.8% in the third quarter, according to the ONS.

This seems to have fed into the savings data.

The household savings ratio for the quarter fell 0.7 percentage points to 9.5%.

That is the lowest figure since it fell to 9.4% in the second quarter of 2024.

The household savings ratio had hit a three-year high of 11.3% at the end of 2024 but has been falling since.

Why has the household savings ratio dropped?

Most of the dip has been from households putting less into savings accounts than pensions.

The drop coincides with the Bank of England cutting interest rates in February, May, August and December of this year.

The cuts have meant interest rates on savings accounts have become less competitive.

Moneyfacts data shows the typical easy access rate dropped from 2.9% at the start of 2025 to 2.53% in December, while the overall average has fallen from 3.66% to 3.42%.

Adam French, head of news at Moneyfactscompare.co.uk, said: “Since the start of 2023, average savings rates have consistently trailed the base rate by around one percentage point.

“If that relationship holds, a 3.5% base rate would translate into average savings rates of roughly 2.5%.”

He warns that even if inflation returns to the Bank’s 2% target, many savers will still struggle to achieve meaningful real returns, leaving their cash effectively standing still.

French said: “If inflation proves stickier than hoped, low real returns may mean household savings are effectively subsidising cheaper borrowing elsewhere in the economy.

“For all the talk about lower rates easing pressure on households, perhaps the most comprehensive way to put money back into more people’s pockets is to stop prices rising so fast, and it risks being at odds with the ongoing desire to cut rates.”

Are you saving enough?

Experts typically suggest saving around 20% of your income.

That may be wishful thinking in the current economic environment though.

The ONS data shows the last time that the savings ratio was above 20% was during the pandemic when it hit 27.5% in the second quarter of 2020 and 21.8% in the first quarter of 2021.

This was possibly because households were unable to go out and spend so they had more spare cash to save.

Inflation may be slowing and interest rate cuts could help push down the cost of borrowing, freeing up some extra cash to save.

But not spending any money may be a big ask next year, especially with millions of households expected to come off of cheap long-term mortgage rates they secured in 2020.

Borrowers will need to find cash to afford mortgage rates of around 4%.

Riz Malik, director at R3 Wealth, said: "Households are under relentless pressure with the cost of living as it is, but the worry moving forward is that many have been insulated by still being on ultra-low fixed rate mortgages.

"However, next year 1.8 million deals are set to mature and will need to be refinanced, and even more people will find it harder to balance the family’s budget."

We look at the average savings by age in a separate piece.

Nationwide has offered some of the best regular savings account deals, but for many who bagged the 6.5% deal last year, the account will be set to mature over the coming weeks and into the new year.

The building society has launched different versions of the regular savings account since lowering the rate from 8% to 6.5% in February 2024.

Anyone who signed up for one around 12 months ago will find the account is ready to mature. Any funds left in the account will transfer into a lower interest instant access savings account after maturity - unless you act now.

If you are in this position, you may be wondering where to move your money once the account expires, especially as interest rates look set to fall further at the Bank of England’s next Monetary Policy Committee on 18 December.

“Regular savings are a great way to put money away each month to help you build your savings habit, but it's important to remember when it matures and switch as the rates you will be left with will be poor. So, be ready to move to either another regular saver or even a cash ISA, where the money in your account and the return you make on it will be tax free,” Kalpana Fitzpatrick, digital editor at MoneyWeek, said.

Here are the options to consider if your Nationwide regular saver is about to mature.

What are the best regular saver accounts right now?

As it stands, the Nationwide 6.5% regular saver account is still available, so you could jump onto it for another 12 months.

The maximum you can pay into the account each month is £200 a month, and the maximum withdrawals you can make are three - any more and you will only earn 1.05% interest.

Nationwide is popular with savers, in particular because of its Fairer Share Scheme, which has paid eligible members £100 on-off bonus in the last two years.

But, if you are after the top rate and only want to commit to saving a regular amount for a few months, then you can earn a slightly better rate with Principality Building Society at 7.5%.

You can open one of the accounts with a minimum deposit of £1 and stash up to £200 a month into the account, with any interest paid when it matures. There are two major drawbacks to the account though - it only offers 7.5% interest for six months and no withdrawals are allowed. However, the account is still worthwhile for people not keen on tying up their money for a whole year.

But, if you want a year, then you can still beat Nationwide’s deal with Zopa Bank’s regular saver account, which pays 7.1% interest and you can pay in up to £300 in each month. You will have to open a Biscuit current account via the Zopa app to qualify for the regular saver account.

The next best is Co-operative Bank’s 7% regular saver - interest is paid when the account matures after 12 months. Savers can open the account with a minimum deposit of just £1 and add up to £250 per month, up to a maximum of £3,000.

You can withdraw cash at any time, but any withdrawal still counts towards the £250 monthly limit. So, if you added £200 then took out £100 in the same month, you’d only be able to add a further £50.

The account is exclusively for current account customers, whether new or existing.

With Nationwide, you would make £2,486.20 over 12 months, and £2,492.98 with Co-op Bank - a £6.78 difference - so there isn’t much difference if you are unsure about moving your money.

What about moving to a different type of savings account?

If your Nationwide regular saver has matured, you could always opt for a different type of savings account altogether.

The first thing to consider is whether you need access to your cash. If you don’t, a one-year fixed savings account could work well. This guarantees you a set interest rate for the whole year (which could be helpful if savings rates fall elsewhere in the market). But you won’t typically be able to access your money without having to pay a penalty.

We round up the best one-year fixed savings accounts.

If you do want to be able to withdraw money, there are still some decent easy-access savings accounts around, despite a glut of recent base rate cuts.

Note that these savings rates can change at any time, so even if you open a 4.5% account, the rate could fall shortly after. This means you’ll need to be ready to switch to a different account to maintain a competitive return.

In any case, you want to make sure your savings account is paying an interest rate that’s higher than inflation (currently 3.6%), otherwise you’re losing money in real-terms.

The best easy access savings rates on offer at the moment are from Cahoot (4.40%), Chip (4.37%) and Shawbrook Bank (4.34%).

If you’re concerned about paying tax on your interest, maximise your cash ISA. All adults can pay in up to £20,000 across their ISAs each tax year, and the interest is completely tax-free. You can choose an easy-access or fixed-rate cash ISA. Just bear in mind the annual allowance for cash ISAs is falling from April 2027.

Caitlyn Eastell, spokesperson at Moneyfacts, said: “During the Budget it was confirmed that the cash ISA tax-free allowance would drop from £20,000 to £12,000 in 2027, so it is crucial that tax savvy savers maximise their returns before it drops.”

If you like the idea of winning prizes with your money – rather than a regular amount of interest - then you could consider Premium Bonds. Any prizes are tax-free, but note that while some lucky customers will scoop prizes, others won’t win anything at all.

Are there any switching bonuses that could boost my savings?

Yes, there are a few switching bonuses on offer for customers transferring their current account which could tempt you in. You may then qualify for a regular saver with that bank or building society.

For example, Santander recently launched a £200 switching offer while Lloyds is offering a free £200 and you can then sign up for its 6.25% regular saver.

Just make sure you check the small print and understand all the criteria you need to hit to get the switching bonus, as well as how your new current account works.

Money market funds and other ‘cash-like’ investments could be subject to the incoming £12,000 cash ISA limit from 6 April 2027, limiting the ability of investors to manage their risk profiles.

Under new rules published by HMRC, ‘cash-like’ investments – which experts believe could include money market funds and similar investments like short-dated bonds – will be subject to tests to establish whether they are eligible to be held in a stocks and shares ISA or a cash ISA.

Beginner investors who are switching from exclusively cash savings towards investing by opening a stocks and shares ISA can currently use money market funds as a bridge between the two. They offer low-risk cash-like returns from within a stocks and shares ISA.

Money market funds have also been rising in popularity and were some of the top funds purchased by DIY investors in November.

But if speculation that money market funds or short-dated bonds would be considered cash-like, the reforms that HMRC is proposing could block new or cautious investors from using these products to manage their risk.

“Blocking money market funds within stocks and shares ISAs would be a serious setback for investors,” said Mark Burges Watson, co-founder of investing app Kaldi. “These funds are among the safest short-term investment options – low-risk, cash-like, and currently yielding over 4%, far higher than instant-access cash ISAs at high street banks.”

MoneyWeek asked HMRC for clarification over whether money market funds would be considered 'cash-like' under the new rules, and how the mechanism for enforcing the respective limits would work - a HMRC spokesperson said: "Rules will be introduced to avoid circumvention of the lower limit for cash ISAs, including tests to determine whether an investment is eligible to be held in a stocks and shares or innovative finance ISA, or is ‘cash like’.

"Whether an investment will qualify for inclusion within an ISA will depend on whether it complies with the rules. The detail of the changes to the rules will be publicised in advance of the change, and following discussions with stakeholders."

The new HMRC rules will also ban transfers from stocks and shares to cash ISAs, as well as implementing a charge on any interest paid on cash holdings within a stocks and shares or Innovative Finance ISA.

Why are investors using money market funds?

Under the current rules, money market funds can be held in a stocks and shares ISA. That means they would theoretically circumvent the upcoming reduction in the annual cash ISA limit to £12,000, which will affect people under the age of 65.

“With the cash ISA allowance cut to £12,000, millions of savers will be forced into taxable accounts for their excess savings,” said Burges Watson. “Money market funds serve as an ideal stepping stone, letting savers park money securely while deciding how to invest or managing short-term market volatility.”

If money market funds were to remain eligible for stocks and shares ISA inclusion (or would otherwise be exempt from the ‘cash-like investment’ restrictions) then savers could theoretically deposit £12,000 annually in a cash ISA and put the remaining £8,000 into money market funds in a stocks and shares ISA – utilising their entire £20,000 ISA allowance but keeping it in low-risk, cash-like investments.

Burges Watson added that restricting access to lower-risk products “undermines the very purpose of ISAs: supporting safe, flexible investment”.

Volatility within the market is a particular concern for many investors, with stretched stock market valuations prompting fears of an AI-driven bubble.

“Record high markets have… served to foster an appetite for lower risk investments such as money market funds and short duration bonds,” said Ryan Hughes, managing director at AJ Bell Investments.

Assets invested in the Money Market model portfolio service (MPS) on AJ Bell’s advised platform tripled in the 12 months to November. The MPS, which is only available to AJ Bell's advised clients, invests in cash, as well as cash alternatives including money market funds and ultra-short-dated bonds.

How would HMRC restrict access to money market funds?

It isn’t clear yet how a potential rule change would be implemented. HMRC's website says that the industry will be consulted on the draft legislation to amend ISA regulations, and that this legislation will appear before Parliament "well ahead" of the April 2027 rule change.

HMRC's statement in response to MoneyWeek's question about enforcement indicates that cash-like investments will likely be excluded from stocks and shares ISA eligibility.

But whatever happens, implementing the block could add further complexity to an ISA system which critics warn is already becoming confusing for beginner investors.

The nature of money market funds may also prohibit HMRC from changing their designation.

“HMRC could have a tough time enforcing these restrictions, as money market funds are classified as investments, carry a ‘Capital At Risk’ warning and are not covered by the FSCS,” said Burges Watson.

Investors will no longer be able to transfer stocks and shares ISA money to cash equivalents under the government’s controversial reforms.

Chancellor Rachel Reeves announced plans in her Autumn Budget to cut the cash ISA allowance for under-65s to £12,000 from April 2027.

The aim is to encourage more people to use their £20,000 ISA allowance to invest in stocks and shares and there are estimates that those leaving money in traditional savings accounts could face paying thousands of pounds extra in tax.

HMRC has now announced more restrictions to incentivise savers towards stocks and shares ISAs.

Transfers from stocks and shares ISAs to cash ISAs will also be banned as part of the changes.

Plus, there will be a charge for those earning interest on cash within a stocks and shares ISA.

This will provide a disincentive for investors to keep cash holdings in a stocks and shares ISA for too long and instead encourage them to put it back into the market.

What are the new ISA transfer rules?

Transfers have been allowed between stocks and shares ISAs and cash ISAs since 2008.

This provided flexibility for people whose strategies and risk appetite may change.

But the system will change again once the cash ISA allowance is cut in April 2027.

An update from HMRC said transfers from stocks and shares and Innovative Finance ISAs to cash ISAs will no longer be allowed.

There will also be tests to determine whether an investment is eligible to be held in a stocks and shares ISA or is ‘cash like.’

Plus, the government looks set to stop people parking cash in a stocks and shares ISA through a platform, where interest rates have been high in recent years.

Currently, cash holdings held in a stocks and shares ISA, often from investment returns or uninvested money, may earn an interest rate while an investor decides how to use the money.

HMRC said it will introduce a charge on any interest paid on cash held in a stocks and shares or Innovative Finance ISA, creating a disincentive to keep hold of cash in the tax wrapper for too long.

These rules, subject to consultation and new legislation, will apply to investors under the age of 65.

Critics may describe this as yet another stealth tax by the government.

Jason Hollands, managing director of Bestinvest, said: “While it is no surprise they are going to take action – as we predicted this - levying a charge on cash held within stocks and shares ISAs is yet another stealth tax that will impact genuine investors who sometimes decide to park money in cash for a period of time awaiting investment, or because they are nervous about the market environment.

“The ‘tests to determine whether eligible investments are ‘cash like’ will throw doubt about access to money market funds within Stocks and shares ISAs and could even bring short-dated bonds into question.

“There is more uncertainty ahead.”

Lifetime ISA changes

HMRC has also given more clues about changes to the Lifetime ISA, that got a short mention in the Autumn Budget document.

The taxman’s alert said: “The government will consult on introducing a new, first time buyer only product that will provide the bonus when a person uses it to buy a house, removing the need for a withdrawal charge and giving savers flexibility in case their circumstances change.”

This may appease those who have complained about withdrawal penalties and makes the produce similar to the now defunct Help to Buy ISA.

Savers will be up to £1,200 worse-off after five years once cash ISA reforms and new savings taxes are introduced, research suggests.

Chancellor Rachel Reeves used her Autumn Budget last week to reveal plans to cut the cash ISA allowance to £12,000 from April 2027 while also raising the income tax rate on savings by two percentage points, to 22% for basic rate taxpayers and 42% for higher earners from the next tax year.

The combination of both changes could be bad news for savers.

Analysis by InvestEngine found that of the 7.1 million who contribute to cash ISA in 2022/2023, 2 million saved more than £12,000.

The investment platform’s research suggests that millions of savers could be affected as the remaining £8,000 they may have previously put in a cash ISA - the difference between the cash ISA and stocks and shares allowance - could end up being taxed in a mainstream savings account, even with the personal savings allowance.

Here is how savers could be affected once savings income tax rises in 2026 and the cash ISA allowance is cut in 2027.

The impact of cash ISA cuts and savings income tax hikes

InvestEngine’s analysis found that almost 1.5 million basic-rate taxpayers and 462,00 higher-rate taxpayers deposited more than £12,000 into their cash ISA in the previous financial year

But it won’t take much for the taxman to come knocking if cash ISA savers divert their money into savings accounts instead.

A basic rate taxpayer will see the income tax on savings rise to 22% from April 2027.

They still have a personal savings allowance of £1,000.

But if they put £8,000 into a savings account each year, earning the current typical rate of 4.5%, the personal savings allowance would be breached after the third year and they will have paid £264 of tax after five years.

It is worse for higher earners, who will face a 42% savings income tax rate and already have a reduced personal savings allowance of £500.

Higher earners saving £8,000 per year at 4.5% would breach the allowance after just two years and face paying £1,216 in tax after five years.

Andrew Prosser, head of investments at InvestEngine, said: “Our analysis shows that millions of savers regularly deposit more than £12,000 a year into cash ISAs.

"This cut to the allowance could push many into paying unnecessary tax on their savings interest."

How to protect your savings after the cash ISA cut

The cut to the cash ISA allowance will take effect in April 2027, with savers being allowed to put the full £20,000 tax-free limit in cash until then.

But after this date, those who still want to put that extra £8,000 into cash will have to get a bit more creative and look into alternative ways to protect their savings from the taxman.

Stocks and shares ISAs

The easiest way for savers to avoid a new tax bill is by investing instead in a stocks and shares ISA.

That may be easier said than done though, especially if you are uncertain about financial markets.

Nottingham Building Society found only 38% of cash ISA holders nationwide would consider switching to a stocks and shares ISA.

Harriet Guevara, chief saving officer at Nottingham Building Society, said: “Millions of savers rely on cash ISAs as a low-risk way to build financial stability. Two thirds of our cash ISA customers have used the full £20,000 allowance so far this year. These aren’t people with excess wealth - they’re individuals and families working hard to save for the future.

“What’s more, limiting cash ISA deposits is also at odds with this government’s own pledge to double the size of the mutuals sector, threatening to shrink mutual lending capacity, limit access to homeownership, and stall the long-term growth of building societies that reinvest in their members and local communities.

“If the government’s intention is to encourage more investment, these changes must go hand in hand with better financial education.”

Over the long term investing your money in a well-diversified portfolio tends to bring about higher returns than if you were to lock your money away in a savings account. Be aware, however, that the value of your investments can go up as well as down.

For more information, read our guides on saving vs. investing and how to start investing.

Premium Bonds

One of the UK’s most popular alternative savings vehicles is NS&I’s Premium Bonds. Unlike conventional savings accounts, money held in Premium Bonds does not earn a guaranteed interest rate.

Instead, for every £1 you have in Premium Bonds, you get one entry into the monthly Premium Bonds prize draw. Prizes range from £25 to £1 million.

Any money you win from Premium Bonds is entirely tax free, meaning if you are one of the lucky two people who wins the £1 million jackpot, you will be able to keep the entire amount.

You can save a maximum of £50,000 in Premium Bonds, but the drawback is that this money is not guaranteed to grow as you may not win every, or indeed any, month.

Laura Suter, director of personal finance at AJ Bell, said: “Currently based on the average chance of winning your average returns [from Premium Bonds] would be 3.6%. It’s less than the best rate you can get on traditional savings accounts, but for some the lure of winning big plus the tax-free prizes will be enough to attract their cash.”

Use fixed-term accounts

When you save money in a fixed-term savings account, you lock your money away to grow at a specific, fixed rate until the end of the specified term.

While you still have to pay tax on interest earned, this is not due until the end of your term. This means that if you time it right, you could defer the tax bill to another tax year.

This can be useful if you expect to drop into a different tax bracket in a future year, allowing you to have a lower tax rate on the interest your money earns.

Suter adds: “Equally it can be a good move if you’ve got lots of taxable savings this year, and so have already hit your tax-free limit, but may have less next year. It’s a good idea to track the savings accounts on a spreadsheet, so you don’t lose track of when they mature, or use a cash savings hub, so they are all in one place.”

The long run-up to the Budget gave rise to fevered and increasingly alarmist speculation about its contents. This descended into chaos as frantic lobbying by interested parties, dire warnings by expert observers, and threats of rebellion by the government’s backbenchers led to U-turn after U-turn. Now, at last, the Budget has been delivered, and the speculation is over. What does it mean for the UK stock market?

The answer is very little. The FTSE 100 is very likely to continue climbing, while mid and small caps, which have underperformed in recent years, should recover lost ground. There is very little correlation between the performance of a country’s economy and its domestic stock market, which is why the Australian stock market has more than doubled in the last 10 years while China’s Shanghai index is up 10%.

About 75% of the FTSE 100’s revenues and about 50% of the FTSE 250’s sales stem from outside the UK. Many FTSE 100 companies, such as BAT, Shell and Rio Tinto, are based in Britain but do very little – if any – business here. Others, like Mondi, Airtel Africa and Coca-Cola HBC (formerly Coca-Cola Hellenic Bottling Company) use a London listing as a mere flag of convenience. Companies like Vodafone, National Grid and Compass have evolved from domestic into international businesses; and primarily domestic companies, such as EasyJet, M&S and Next, are increasing their overseas exposure.

Twenty years ago, the blue-chip index was dominated by mega-cap companies that had grown big through mergers in the late 1990s but were then stagnating in terms of business, earnings and share price. Now, those companies, much diminished in relative terms, are working hard to grow, improve profitability and reward shareholders. Even Glaxo and Vodafone have seen notable turnarounds recently, while Diageo reacted quickly to disappointing trading that had halved its share price.

UK-based companies are not expecting the government to do them any favours with regard to the economy, profitability or taxation; their attitude to investing and doing business in the UK is based on pragmatism. AstraZeneca has therefore responded to a withdrawal of government support by switching its attention to the US.

Global investors spot a bargain in UK stocks

UK-listed companies are attracting increasing attention from overseas investors, who are gradually eclipsing domestic ones. In the last couple of years, the chart of the FTSE 100 has accelerated upwards, while there have been “early signs of an earnings reacceleration”, says Chris Watling of Longview Economics.

The prime problem for the UK market has been the lack of participation by domestic investors, but this is likely to change. There have been heavy net outflows from equity funds, especially from UK funds (in 50 of the last 51 months). UK investors have shunned equities, deterred by risk warnings, economic gloom and regulatory hostility, and unaware that cash loses value over time in real terms. Over two-thirds of individual savings accounts (ISAs) are just in cash.

Yet the UK savings rate is over 10%, double the historic average. Interest rates and hence deposit rates are likely to fall further, and equity markets have been rising for three years. Savers will wake up to the reality that they are missing out and, in 2026, should start to discount a change to a more business- and investment-friendly government. Finally, the attention drawn to the FTSE 100 breaking through 10,000 should galvanise investors.

Admittedly, the tenfold appreciation since launch at the start of 1984 is not that impressive in annual terms. Adding back an average dividend yield of 3%, the annualised return has been 8.5% or 5.6% in real terms. The return until 2000 was much better than subsequently, but at its millennium peak of nearly 7,000, the FTSE 100 was severely overvalued and set to fall in half. Taking this into account by estimating a trend level of 4,500 still shows a marked slowdown in annual returns from 10% in real terms before 2000 to only 3.3% subsequently.

Arguably, the change of trend coincided with the deceleration of economic growth in 2008, but it is likely that an unsustainable boom in financial services disguised a more gradual slowdown in the preceding years. In any case, the claim that Britain’s economic problems date back to the Brexit vote in 2016 are a myth, just as was the claim in the 1960s and early 1970s that Britain’s pedestrian economic performance was attributable to being outside the EEC.

Ultimately, sustained outperformance by the UK stock market will require a strong, lower-tax economy to encourage the creation of growth businesses, their access to domestic capital and their listing in London. The market needs to go up because demand for equities exceeds and pulls up supply, not because markets are shrinking (through takeovers and buybacks) faster than investors are taking their money out.

As economist Arthur Laffer points out, “every time we have raised taxes on the rich, three things have happened: the economy underperformed, the share of tax revenues from the rich fell and the poor got hammered. When we cut taxes, the reverse happened.”

Even the prime minister has said that “the UK cannot tax its way to growth”, though his chancellor and most of his party appear to disagree. “If you want to help the poor, create growth,” says Laffer, who quotes John F. Kennedy: “The best form of welfare is a good, well-paid job.”

Better economic news for the UK may be a change of government away, but the good news for investors, whether in the UK or via UK-listed funds, is here already.

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The Premium Bonds prize fund rate could potentially be in line for a boost after the National Savings and Investments (NS&I) fundraising target was hiked in the Budget.

The government-backed savings provider now has a net financing target of £13 billion for the 2025/26 financial year, within a plus or minus range of £4 billion.

Its previous target for the same financial year was £12 billion – £1 billion less.

It means NS&I could raise as much as £17 billion from savings products without breaking its financial target.

NS&I has raised just £3.9 billion in the first half of this financial year, meaning it’s more than £9 billion away from hitting the target.

This could potentially prompt it to increase its Premium Bonds prize fund rate to attract more customers. The prize fund rate is currently 3.6%, after being lowered from 3.8% in August.

Mark Hicks, head of active savings at investment platform Hargreaves Lansdown, said the prize rate may “hold steady”, despite savings rates falling more widely.

It comes after NS&I increased the rates on new issues of its British Savings Bonds in November, bumping up their rates to between 4.15% and 4.20%.

Rates were raised on one, two, three and five-year bonds, available to new and maturing customers, after the Bank of England (BoE) held interest rates the day before.

NS&I would have bumped up the rates on the savings account in order to help reach its fundraising target.

However, there is “still a chance it will need to make up lost ground” to hit the £13 billion and the Premium Bonds prize fund rate “could be in the frame”, said Hicks.

Laura Suter, director of personal finance at AJ Bell, echoed this, adding: “The uplift to NS&I’s net-financing target is a clear sign that the government needs more money from savers this year, and that usually puts NS&I under pressure to increase its rates.

“When the funding target rises, NS&I tends to respond in the only way it really can: by making its products more appealing.”

There is also the chance NS&I raises interest rates on some of its other savings products and not Premium Bonds.

An NS&I spokesperson said: "We review the interest rates on all of our products regularly to ensure that we continue to balance the interests of savers, taxpayers and the broader financial services sector."

Could falling interest rates lead to the Premium Bonds prize rate falling?

Interest rates could fall over the coming months and into 2026, meaning any hopes of an increase to the Premium Bonds prize rate will likely be short-lived.

The Bank of England believes inflation has peaked this year, and should fall back towards its 2% target over the next year or so, leading it to lower interest rates.

Hicks said: “Given the fact a Bank of England rate cut is expected in December, and rates are expected to trend downwards from here, we may see banks lower their savings deals in 2026, so there will be pressure on the prize rate to fall.

“We will need to wait and see whether the need for fundraising trumps this in the coming months.”

Dax Harkins, NS&I chief executive, said: “We are pleased to be able to support a further increase of £1 billion, taking the target to £13 billion.

“Our pricing is designed to meet this revised target and maintain market stability, and we expect our performance to continue steadily through the second half of the financial year.”

Are Premium Bonds worth it?

Premium Bonds offer savers the chance of winning tax-free cash in the monthly draw. There are no guaranteed returns, though.

Some people also like knowing their savings are being given to the government and invested in the UK.

That said, the chances of winning the monthly prize are relatively slim.

The odds of winning are currently 22,000 to one for every £1 Bond in the monthly prize draw.

Recent research from AJ Bell found almost two-thirds (63%) of Premium Bond holders have never won a prize.

Meanwhile, you might prefer to hold your money in a savings account which pays regular interest rather than relying on one with no guarantee of a return.

Chancellor Rachel Reeves is slashing the amount millions of savers can put into a cash ISA each tax year. From April 2027, under-65s can put no more than £12,000 into a cash ISA each tax year, down from the current £20,000 cap.

Reeves hopes the move will encourage savers to invest more of their cash.

“The UK has some of the lowest levels of retail investment in the G7, and that is not only bad for business, who need that investment to grow; it is bad for savers, too,” she said during today’s Budget speech.

“Someone who had invested £1,000 a year in an average stocks and shares individual savings account [ISA] every year since 1999 would be £50,000 better off today than if they had put the same money into a cash ISA.”

However, the limit was branded “a sucker punch for savers and deeply disappointing for lenders” by Harriet Guevera, chief saving officer at Nottingham Building Society.

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

Carol Knight, chief executive of The Investing and Saving Alliance (TISA), a not-for-profit membership organisation, said: "The cash ISA has been an incredibly effective tool in encouraging saving, and there is no clear evidence that reducing the cash ISA limit will encourage more people to invest.”

Some welcomed the decision though. James Carter, head of platform policy at Fidelity International, said: "Today’s announcement marks an important step towards  supporting consumers to achieve better long-term financial outcomes  by  creating a better balance of incentive between cash and equities – fostering a culture of retail investment.”

How will the cash ISA limit change?

From 6 April 2027, the annual cash ISA limit will be set at £12,000. This is within an overall £20,000 annual ISA allowance.

The new cash ISA cap will only affect under-65s.

There is not currently a specific cash ISA allowance. You can put a maximum of £20,000 a year into ISAs. This can be put into one type of ISA, or split across different types.

For instance, you could put some money into a cash ISA, some into a stocks and shares ISA, some into an innovative finance ISA, and, if eligible, some into a Lifetime ISA. There is a separate £4,000 per year Lifetime ISA cap.

If you put the maximum £12,000 into a cash ISA in one tax year, you would only have £8,000 of the allowance left to put into the other types of ISA.

On the other hand, if you put £12,000 into a stocks and shares ISA, you could only put a total of £8,000 into the other types of ISA that tax year.

Over-65s are exempt from the changes and can continue putting up to £20,000 into cash ISAs each year, if they wish to.

What is an ISA?

An ISA is a tax-free savings vehicle – you don’t pay tax on savings interest or income or capital gains from investments in an ISA.

There are five types of adult ISA:

• Cash ISAs
• Stocks and shares ISAs
• Innovative finance ISAs
• Lifetime ISAs
• Help to Buy ISAs (you can no longer open a Help to Buy ISA)

The annual ISA allowance is £20,000 for adults. You can put up to £9,000 a year into a junior ISA, a tax-free account for children.

The annual allowances reset each tax year, which runs from 6 April to 5 April the following year.

You can put up to £4,000 into a Lifetime ISA each tax year, provided this doesn’t exceed the overall ISA annual allowance.

Why put savings in an ISA?

ISAs are becoming increasingly important as a way of shielding money from the taxman.

Savings and investments held in an ISA are tax-free.

Outside of an ISA, you can earn a certain amount of interest on your savings tax-free, thanks to the personal savings allowance. However, frozen tax thresholds and higher interest rates mean more savers are being dragged into paying tax on their savings.

In 2025/26, 2.64 million people are expected to pay tax on their savings – up from just 647,000 in 2021/22 – according to HMRC data obtained via an FOI by AJ Bell.

In the Autumn Budget, Reeves also announced the tax rate on savings income will be hiked by two percentage points across all bands from April 2027 – meaning savers face paying even more in tax on their savings interest.

“There’s no doubt that cash ISA use will explode in the next couple of years,” Laura Suter, director of personal finance at AJ Bell said.

“As more people have faced tax on their savings we’ve seen ISAs become more popular, but the double-pronged effect of higher savings tax rates and a looming plan for cash ISAs to be restricted means savers are facing an attack on two fronts.”

Read more: How to earn over 4% on your cash… using a stocks and shares ISA

Will Lifetime ISAs be reformed?

The government addressed possible Lifetime ISA reform in the 2025 Budget document.

A consultation on the implementation of a new, “simpler” ISA product to support first-time buyers in buying a home will be published in early 2026.

Once the new product becomes available, it will be offered in place of the Lifetime ISA, the government said.

Lifetime ISA savers can put £4,000 a year into this account and get a 25% government bonus – worth up to £1,000 a year.

If you want to use the money to buy a first home, the property must cost £450,000 or less, which critics argue is too stringent.

Savers who don’t meet the withdrawal criteria face a 25% unauthorised withdrawal charge.

Millions of savers in the UK are being dragged into paying tax on their savings interest because the personal savings allowance (PSA) has been frozen for a decade, according to new research.

By the end of the 2025/26 tax year, taxpayers will have paid over £28 billion in tax on their savings interest since the PSA was launched, with basic rate taxpayers alone paying £4.7 billion, analysis of HMRC data and forecasts by Yorkshire Building Society found, outlining the impact of a policy that has been unchanged since it was introduced in 2016.

Despite jumps in interest rates and frozen tax thresholds pushing more people into higher tax bands, the PSA remains frozen at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, while additional rate taxpayers still have no allowance at all. During the same period, the Bank of England base rate has climbed from 0.50% to 3.75%, instantly pushing ordinary savers over their allowances even on fairly modest sums.

The landscape for savers has materially changed over the past decade. When the personal savings allowance was introduced on 6 April 2016, the majority of easy access accounts paid 1% or less. Now most pay 3% or less. This means while in 2016 basic-rate-tax payers would have been able to put away as much as £100,000 in a typical savings account, in 2026, with interest rates hovering around 3%, savers would only be able to save around £33,000 without breaching their allowance. For those earning over £50,271 and paying higher-rate tax, that amount would fall to around £16,000.

At the same time people need bigger savings nest-eggs to be able to reach ordinary milestones. The median average house deposit has jumped from £25,000 in 2016 to £36,500 in 2024/5 – an increase of 46%, according to the English Housing Survey Headline Report.

Tina Hughes, director of savings at Yorkshire Building Society, said: “Ordinary people are being penalised by a system that simply hasn’t kept pace with reality. These aren’t wealthy investors — they’re people putting money aside for a house deposit, families saving for their children, or those planning a well-earned holiday.

“When the PSA was introduced, almost no one breached it. Today, millions do — not because they’re rich, but because the allowance is frozen and thresholds haven’t moved. People doing the right thing are facing rising tax bills and fewer ways to protect their savings. It’s time for a modern, fair framework that gives savers clarity and confidence.”

Millions at risk of 'unnecessary' tax bill

Basic rate taxpayers (who earn between £12,571 and £50,270) in the UK hold £516 billion in non-ISA savings accounts that have large enough balances to breach the personal savings allowance, separate data from Paragon Bank showed in November 2025.

The personal savings allowance shields some taxpayers from having to pay income tax on savings interest – basic rate taxpayers can earn up to £1,000 a year in savings interest, while the allowance is £500 for higher rate taxpayers.

However, 5.2 million UK savings accounts owned by basic rate taxpayers were on track to earn more than the £1,000 allowance in interest in 2025, the data shows, leaving them with a 20% tax bill on the savings interest above the threshold.

The problem becomes even worse for higher rate taxpayers.

Higher rate taxpayers (people who earn between £50,271 and £125,140) have their personal savings allowance cut by half, leaving them with just £500 of tax-free savings interest outside an ISA.

Nine million UK non-ISA savings accounts owned by higher rate taxpayers, worth over £632.7 billion, were expected to earn more than £500 in interest in 2025, Paragon’s research shows, meaning these savers should prepare for an extra tax bill.

Additional rate taxpayers, who pay the highest rate of income tax, don’t get a personal savings allowance at all, meaning any interest they earn outside an ISA is subject to tax.

Brits who earn above the personal savings allowance in interest have increasingly helped bolster the government’s coffers. HMRC expected to generate £6 billion in income tax on savings interest in 2025, up from £2 billion in the 2022/23 tax year.

Additional rate taxpayers are expected to contribute the most (£4.2 billion), followed by higher rate taxpayers (£1.3 billion), and basic rate taxpayers (£500 million).

Andrew Wright, head of savings at Paragon Bank, said: “Savers should act now to protect their hard-earned money by moving funds into a tax-free wrapper such as a cash ISA.”

Using an ISA to shield your savings

The easiest way for UK savers to shield their savings interest from the taxman is by using an ISA.

You can put up to £20,000 into ISAs each tax year. There are different types of ISA – including cash ISAs and stocks and shares ISAs. The appeal of an ISA is that any interest or investment income earned within the ISA is shielded from the taxman.

For example, let’s assume you are a basic rate taxpayer who has built up an ISA holding of £100,000 by saving the maximum amount in a cash ISA for five years.

If you placed the entire amount into the best cash ISA on the market right now, from Plum, you could expect to earn 4.66% interest over the next 12 months.

At the end of the 12 months, assuming the interest rate did not change, this £100,000 would grow by £4,660. Because this money was held in an ISA, you would not be charged any tax on that.

However, if this £100,000 was held and grown in a non-ISA savings account, the £4,660 earned would breach the £1,000 personal savings allowance, meaning £3,660 of your interest earned would be taxable. You would therefore pay the government £732 in tax.

Adult cash ISA balances surged in 2025 as savers moved to protect tax‑free returns ahead of the Autumn Budget, with Paragon Bank analysis showing cash ISA balances increasing by over £50 billion as non‑ISA balances fell.

Between the end of January and end of December 2025 savers took a big shift towards tax-efficient savings ahead of the anticipated reduction in the cash ISA allowance announced in the Autumn Budget, CACI data for the period found.

Over the period, the average adult cash ISA account balance increased from £15,919 to £17,225. Meanwhile the average non-ISA account balance fell marginally from £11,919 to £11,909. The data suggests savers were seeking to maximise tax-free interest before potential ISA threshold changes in the 2025 Budget.

Total adult cash ISA balances rose by £57 billion during the period, with much of the growth driven by strong demand for fixed-term products. Overall, adult cash ISA balances in accounts totalled £436 billion across 25 million accounts at December 2025.

Fixed-term ISAs accounted for £35.8 billion of the overall increase, rising to £237.7 billion as customers locked in rates ahead of an expected reduction in interest rates. Instant access ISA balances also grew, albeit at a steadier pace, increasing by £22.4 billion to £192.9 billion.

In contrast, non-ISA balances fell by £1.8 billion over the same period to £845.6 billion across 71 million accounts. This was mainly driven by fixed-term non-ISA balances falling as savers reallocated money into tax-efficient wrappers.

Andrew Wright, head of savings at Paragon Bank, said: “2025 marked a clear shift in saver behaviour, with many people taking proactive steps to protect their returns by making greater use of tax-efficient savings. Anticipation of changes announced in the Autumn Budget encouraged savers to review where their money was held and to maximise the benefits of cash ISAs while allowances remained unchanged.

“What’s particularly notable is the strength of demand for fixed-term ISA products. Savers were not only responding to potential tax changes but also looking to lock in competitive rates amid expectations that interest rates would begin to fall. This combination of tax planning and rate certainty made fixed-term ISAs especially attractive.”

If you've used up your annual allowance, we look at other ways to shield your savings from tax in a separate guide.

Cash ISA savers may have to put money away for an extra 13 years to build a half a million pound savings pot and 16 more years for £1 million if the tax-free allowance is cut.

A reduced cash ISA allowance is rumoured to be one of the main policy changes in the chancellor’s Autumn Budget this week.

There is speculations that Rachel Reeves could halve the allowance to £10,000 or to £12,000 in an attempt to boost investment ideally into British stocks.

But analysis by Investec has highlighted the impact this would have on cash savers, ultimately making it harder for them to build wealth.

Investec claims it currently takes 19 years to reach a half a million pound cash ISA pot, based on average rates, and 17 years for the top rates.

But it could take as long as 32 years with a reduced allowance.

There may also be fewer ISA millionaires, with the time taken to build a £1 million pot rising from 32 to 48 years with a reduced £10,000 allowance based on average rates.

Here is how a reduced cash ISA allowance would affect savers.

The cash ISA conundrum

Reeves is rumoured to be considering cutting the cash ISA allowance to push more money into the financial markets.

The hope is that this would benefit UK stocks and shares ISAs but there would be consequences for those who favour cash savings.

Currently, the average cash ISA pays a rate of 2.79% a year, according to Investec.

A saver depositing £20,000 a year into the typical cash ISA would take 19 years to reach the half a million-pound milestone, according to Investec Save analysis, with interest compounded and assuming no withdrawals.

This drops to 17 years for those who open a current top 10 cash ISA, paying an average rate of 4.17%.

However, a saver only depositing £10,000 a year into the average cash ISA would instead take 32 years to save £500,000 – an extra 13 years.

This falls to 27 years if using Investec’s one-year fixed rate cash ISA, currently paying 4.27%.

Building a £1 million cash ISA pot would also get harder. The research suggests it would take 48 years to get to £1 million based on a rate of 2.79% and 40 years at 4.27%. That compares with 32 and 27 years currently.

David Hunt, head of deposits at Investec, said: “Halving the annual cash ISA allowance would make it significantly harder for savers to build meaningful long-term wealth. Our analysis shows that saving £500k in a cash ISA could take an extra 13 years under the rumoured changes.

“This highlights just how powerful consistent saving and the effect of compound interest can be over time, but also how sensitive those outcomes are to policy changes. The ISA has been one of the most successful savings vehicles in the UK, encouraging millions to save tax-efficiently for the future. Reducing the annual limit would inevitably slow that progress for ordinary cash ISA savers, particularly those who are disciplined about maximising their yearly contributions.”

The most recent rumours suggest the cash ISA allowance could be cut to £12,000 and even then it would take around 28 years to get to half a million pounds and 44 years for a £1 million tax-free pot.

There are also warnings that the reduced cash ISA allowance could hit building societies that often offer some of the top rates.

Andrew Montlake, chief executive at London-based Coreco, said: “While we understand the government's logic for encouraging growth and investment rather than saving, with any action there is a reaction.

"Cutting the cash ISA limit could have a real knock-on effect that restricts the level of money building societies get through the door.

"This will potentially mean fewer loans for borrowers, especially in niches such as holiday lets and adverse credit where many building societies come into their own.”

Summary

• Chancellor Rachel Reeves delivered her Autumn Budget speech in the House of Commons on Wednesday, 26 November
• The OBR’s forecast was accidentally leaked in a “technical error” prior to the Budget’s announcement, which Reeves said was “deeply disappointing”
• A range of tax hikes were announced as Reeves attempts to balance the books
• The chancellor cut the cash ISA limit from £20,000 to £12,000 per year for under 65s, from April 2027
• She also confirmed a £2,000 cap on National Insurance contributions relief for pension contributions made through salary sacrifice

What was announced in the Autumn Budget? | Autumn Budget winners and losers

Good afternoon and welcome to MoneyWeek’s Autumn Budget live report. Chancellor Rachel Reeves is due to announce her 2025 Autumn Budget at lunchtime tomorrow, Wednesday 26 November. We will be covering the announcements as they happen, as well as bringing you reaction and analysis.

What has Rachel Reeves said about the Budget – and what could be announced?

Chancellor Rachel Reeves gave a rare pre-Budget speech on 4 November, during which she pledged to cut NHS waiting lists, cut the national debt and cut the cost of living.

She promised a Budget “for growth with fairness at its heart… and a Budget that supports businesses – to create jobs and to innovate”.

However, it’s widely expected that a slew of tax hikes will be announced tomorrow.

In the 2024 Labour Party manifesto, the party promised not to raise National Insurance, the basic, higher, or additional rates of income tax, or VAT, so the chancellor will likely need to look elsewhere.

This could mean extending the ongoing freeze on income tax thresholds, from 2028 to 2030.

Another way the chancellor could boost Treasury coffers is a clampdown on salary sacrifice, or targeting dividend tax or capital gains tax.

There could also be a shake-up to property taxes, inheritance tax, and/or business taxes.

It was rumoured Reeves was considering raising income tax rates by 2p, and cutting National Insurance by the same amount, in a move which could raise £6 billion, according to think tank the Resolution Foundation.

However, the chancellor has reportedly since backed away from this idea.

Read more on potential tax hikes in our guide.

What time is the Autumn Budget?

Rachel Reeves will deliver the Autumn Budget in the House of Commons on Wednesday (26 November) at around 12:30pm, after Prime Minister’s Questions.

Most budget speeches usually last around an hour, but they could be shorter or longer depending on the content. It took Reeves roughly 80 minutes to deliver her first Budget in 2024.

Once Reeves finishes speaking, the shadow chancellor, currently Conservative MP Mel Stride, is expected to give a rebuttal that will last around 20 minutes. The debate then begins in earnest, likely dominating House business for the week ahead.

Daniel Hilton, junior writer

Will the cash ISA limit be cut?

Reeves is set to cut the annual cash ISA limit to £12,000 in the Autumn Budget, the Financial Times reports.

There is currently an overall £20,000 annual allowance for ISAs – this can be split across different types of ISA. For example, you could put £5,000 into a cash ISA and £15,000 into a stocks and shares ISA in a tax year, or you could use the whole annual allowance by putting £20,000 into a cash ISA if you wanted.

It's been suggested such a move could incentivise savers to put their money into a stocks and shares ISA instead, potentially boosting the British stock market.

In March, Reeves said she was seeking to “get the balance right between cash and equities to earn better returns for savers” and “boost the culture of retail investment” in the UK.

However, critics warn against the idea. The Building Societies Association, which represents 43 UK building societies and six credit unions, said building societies use cash ISA deposits to fund mortgages, so cutting the limit could make lending more expensive.

Meanwhile, Dame Meg Hillier, chair of the Treasury Select Committee, said now isn’t the right time to cut the cash ISA allowance. She added: “Instead, the Treasury should focus on ensuring that people are equipped with the necessary information and confidence to make informed investment decisions.”

What would a cash ISA allowance cut mean for savers?

The average amount saved into a cash ISA in 2023/24 was less than £7,000 per person, HMRC figures show, suggesting a £12,000 limit might not have a dramatic impact on most people.

However, it does "risk sending a confusing message to savers", says Adam French, head of news at Moneyfactscompare.co.uk.

“For many families, young professionals and pensioners, the full £20,000 allowance may be out of reach, but the principle that they can build a risk-free cash buffer against a volatile world without worrying about future tax changes still matters.”

The ongoing freeze on income tax thresholds mean more Britons face being dragged into higher tax bands. Combined with higher interest rates, savers will find more of their savings interest becomes liable for income tax, making the tax-free ISA wrapper increasingly important.

“Taken together, this feels less like a coherent plan to boost long-term investment and more like a quiet raid on those who are trying to do the right thing,” French said.

“By leaning on frozen thresholds and a lower cash ISA limit, the government is quietly raising revenue off the back of diligent savers, when it should be encouraging responsible financial decisions and a healthier savings and investment culture.”

Read more: 'I've used my annual ISA allowance. How can I shield my savings from tax?'

The best and worst case scenarios for the financial markets

What’s the best and worst we can realistically hope for in the Budget, and how might the markets respond?

“Arguably the best case scenario for financial markets would be the unveiling of more rosier than expected projections for both UK growth and productivity, and a smaller fiscal gap than previously feared,” says Matthew Ryan, head of market strategy at global financial services firm Ebury.

That would reduce the size of the fiscal deficit, enabling Reeves to maintain credibility by plugging it with narrower, more targeted tax hikes and avoiding the need to breach any of its manifesto pledges.

But the chances of things panning out this way don’t seem strong.

“We are bracing for some curveballs,” says Ryan. “Investors will be on high alert for any unexpected tax increases, and the risk of both higher borrowing forecasts and further above-inflation spending hikes.”

A tax-heavy Budget could see sterling sell off, and given the anticipated negative impact on growth, could lead to faster rate cuts from the Bank of England.

“A more growth friendly budget would have the opposite effect, as easing bets in favour of MPC cuts would amplify upside in the pound,” says Ryan.

Dan McEvoy, senior writer

Help to Save scheme set to be expanded

The chancellor is expected to make the Help to Save scheme permanent from 2028. It had been due to end in 2027.

It is also set to be opened up to parents and carers on Universal Credit from 2028.

Help to Save offers a 50% boost on savings in the scheme – giving eligible savers a potential government bonus of £1,200 over four years.

Soft drink levy extended

The soft drinks industry levy will be expanded to include sugary milk-based drinks, Health Secretary Wes Streeting announced today.

The changes will affect pre-packaged milk-based and milk-alternative drinks with added sugar, such as supermarket milkshakes, flavoured milks, sweetened yoghurt drinks, chocolate milk drinks, and ready-to-drink coffees.

This does not include plain, unsweetened milk and milk-alternative drinks.

The government will also reduce the threshold from 5 grams to 4.5 grams of sugar per 100ml.

Businesses will have until 1 January 2028 to reduce sugar in their drinks, or face the levy.

Health and Social Care Secretary Wes Streeting said: "The levy has already shown that when industry cuts sugar levels, children’s health improves. So, we’re going further.

“A healthier nation will mean less pressure on our NHS, a healthier economy, and a happier society.”

The government expects the changes to raise £40 million to £45 million per year in extra tax receipts, once introduced on 1 January 2028.

What do we know about the Budget so far?

While a lot is still under wraps, the Treasury has confirmed a number of policies in recent days.

Reeves is extending the freeze on NHS prescription charges next year, saving patients in England around £12 million, the government said.

A single prescription will remain at £9.90 and three-month and annual prescriptions prepayment certificates will also be held at the current level for 2026/27.

On Sunday, the Treasury announced all regulated rail fares would be frozen next year, for the first time in 30 years.

The chancellor is also set to confirm the state pension will rise by 4.8% during tomorrow’s speech, affecting 13 million pensioners.

Find out what we know so far about Rachel Reeves’s 2025 Autumn Budget in our guide.

National Living Wage and National Minimum Wage to rise

Chancellor Rachel Reeves has unveiled another sweetener this evening ahead of the Autumn Budget by announcing an increase to the National Living Wage (NLW) and also the National Minimum Wage (NMW).

From 1 April 2026, the NLW will rise by 4.1% to £12.71 per hour for eligible workers aged 21 and over.

This will increase the gross annual earnings of a full-time worker on the NLW by £900, benefiting around 2.4 million low-paid workers, the Treasury said.

The NMW rate for 18 to 20-year-olds will also increase by 8.5% to £10.85 per hour.

This will mean an annual earnings increase of £1,500 for a full-time worker, and marks further progress towards the government’s goal of phasing out 18-20 wage bands and establishing a single adult rate.

The NMW for 16 to 17-year-olds and those on apprenticeships will increase by 6% to £8 per hour.

It is good news for employees but employers may worry about the extra costs after already being hit with National Insurance hikes in the previous Budget.

The benefits of the pay rise may also be offset though by other rumoured policies such as a clampdown on salary sacrifice for pension contributions and an extension of frozen income tax thresholds, putting more people at risk of fiscal drag.

Marc Shoffman, contributing editor

MoneyWeek’s Budget wishlist

That’s all from us this evening – we will be back tomorrow morning for live coverage of Budget Day.

Before we sign off, the MoneyWeek team has shared what they’d like to see in the Budget.

Thank you for joining us for our 2025 Autumn Budget preview. Please join us again tomorrow morning as we prepare to hear what the chancellor will announce.

How do you feel about the Autumn Budget?

Good morning and happy Autumn Budget Day! There are just hours to go until Rachel Reeves delivers her speech in the House of Commons. Tax rises and/or spending cuts are almost certainly on the cards, but it remains to be seen just what the chancellor will announce.

We want to hear from you – how are you feeling about today’s Budget? Vote in our poll below.

What will be in the 2025 Autumn Budget?

Reeves will deliver the Budget speech today at around 12.30pm, after Prime Minister’s Questions.

Some details have already been announced – such as an increase to the national living wage and national minimum wage next year, and an extension of the freeze to NHS prescription charges.

Reeves: 'Britain won’t return to austerity’

Ahead of her Budget speech today, the chancellor has said she will take "the fair and necessary choices" to deliver on the Government’s mandate for change.

In a video, Reeves said: “I’m not going to return Britain back to austerity. Nor will I lose control of public spending, more reckless borrowing.”

She added: “I will take action to help families with the cost of living…cut hospital waiting lists…cut the national debt."

Farmers protesting in Westminster ahead of Autumn Budget

Tractors are assembling outside the Houses of Parliament this morning ahead of the Autumn Budget, in protest against a move that Reeves brought in last year to remove inheritance tax relief above £1 million for farms and rural businesses.

“Whilst much of the focus has been on the anticipated new policies being announced today, tractors in Downing Street again this morning illustrate the impact that is still being felt in rural communities around the changes announced last year to Agricultural Property Relief,” said Hannah Wallbridge, senior associate at regional law firm Gardner Leader.

The changes, which critics argue will force the breakup of smaller, family-owned farms, will take effect in April 2026.

“Unless further changes are announced today, the clock continues to run for those farming families to seek estate planning advice,” said Wallbridge.

Dan McEvoy, senior writer

Could we see exemptions to stamp duty on shares in the Autumn Budget?

One of Reeves’s many headaches in the Autumn Budget today is finding a way to reinvigorate London’s long-suffering stock market.

The London Stock Exchange (LSE) has seen some of the UK’s biggest companies, such as AstraZeneca and Wise, seek new listings overseas this year. There is a not-unjustified perception that UK-listed companies suffer from low valuations, especially in comparison to US-listed counterparts.

Yesterday, Bloomberg reported that Reeves is considering a stamp duty holiday for companies that list on the LSE. If it comes about, it would see companies exempted from the 0.5% stamp duty tax that currently applies to UK-listed shares for three years after their IPO.

“If this Budget rumour proves accurate, it may be the carrot British businesses need to plump for a domestic listing,” said Emma Wall, chief investment strategist at Hargreaves Lansdown.

Reeves is also expected to announce other measures aimed at encouraging Brits to start investing, including a potential cut to the annual cash ISA allowance in order to encourage investments into stocks and shares ISA.

Dan McEvoy, senior writer

When were the longest and the shortest Budget speeches?

Sitting through upwards of an hour of dense talk on the public finances can be somewhat of a slog, even for the most passionate among us.

Spare a thought, then, for some of Parliament’s honourable Victorian members who listened to the longest uninterrupted Budget speech in history in 1853.

The marathon address was given by then chancellor William Ewart Gladstone, who spoke for around four hours and 45 minutes. Such lengthy speeches were characteristic of the four-time Liberal prime minister – he was notable for often giving speeches of up to five hours without a break when he campaigned in Midlothian.

Gladstone’s opposite in almost every sense was the Conservative politician Benjamin Disraeli, Gladstone’s political arch-rival with whom he traded the premiership of the UK across decades.

It is perhaps fitting that Disraeli holds the opposite Budget record, delivering the shortest Budget in history in 1867, lasting just 45 minutes.

That is not to say that Disraeli was not susceptible to speaking at length. When including Budgets with interruptions, Disraeli holds the record for the longest speech, lasting five hours, though this included a break.

Daniel Hilton, junior writer

The lost art of a budgetary tipple

Drinking on the job is probably not allowed in your workplace and, despite the many bars nestled within the Palace of Westminster, is usually forbidden in the House of Commons for politicians – that is, apart from in one circumstance.

The chancellor is the only politician permitted to drink alcohol in the chamber, according to parliamentary tradition, and can only do so when delivering the Budget.

Previous chancellors have made the most of this. William Ewart Gladstone, who first became chancellor in 1852 and later became the prime minister, drank a bizarre mixture of sherry and beaten egg, while his opposite number, Conservative politician Benjamin Disraeli, drank brandy and water.

It is not just chancellors far in the past who embraced the tradition. More recent examples include Geoffrey Howe (gin and tonic), Nigel Lawson (spritzer), Hugh Gaitskell (rum and orange), Hugh Dalton (rum and milk), Winston Churchill (brandy), and Kenneth Clarke (whisky).

These days, the tradition seems to be dead. Every chancellor since Gordon Brown has had plain water while delivering the budget.

Daniel Hilton, junior writer

Balancing the books in the Autumn Budget

The Autumn Budget is, first and foremost, an exercise in balancing the national books. Rachel Reeves has an added challenge on this front as, during last year’s election campaign, the Labour party pledged to not raise any of the “big three” taxes on working people (income tax, (employees’) national insurance and VAT).

Labour’s fiscal rules also commit the government to fund day-to-day spending entirely through revenue as opposed to borrowing by the 2029/30 tax year.

“Chancellor Reeves will want to show a materially higher fiscal consolidation in the Autumn Budget of close to £30 billion, likely extending the headroom against the fiscal rules closer to £15 billion,” said Reto Cueni, chief economist at private bank Syz Group.

Achieving this will require tax increases, and Reeves will likely target ‘non-inflationary’ areas such as tax threshold freezes or reducing capital gains tax exemptions.

“Further tax hikes are a foregone conclusion. Some, including another freeze to the income tax thresholds, are as good as fully priced in by markets,” said Matthew Ryan, head of market strategy at Ebury.

“It will be key for the government to show that over the next two years the budget deficit will be reduced and the UK’s debt burden will finally move down,” said Cueni. “By reducing the fiscal deficit over the next two years, the government can regain fiscal credibility and assure investors that the UK’s government is keeping control of the debt situation.

“This would relax tensions in the gilts market and let yields grind lower,” Cueni added.

Dan McEvoy, senior writer

Reeves leaves Downing Street

Chancellor Rachel Reeves has left Number 11 Downing Street to deliver the 2025 Autumn Budget. She will make the long-awaited speech at around 12.30pm in the House of Commons, after Prime Minister's Questions.

FTSE 100 on the rise ahead of Autumn Budget

Not many people are feeling happy about the Autumn Budget, as speculation over tax rises continue to heat up.

But for the FTSE 100 and bonds market, it’s been more of a joyous morning as stocks and bonds rise with the budget set to draw a line under months of speculation and uncertainty for businesses.

Ten-year UK gilt yields – in effect, the return the government promises to pay buyers of its debt – opened higher this morning at around 4.52%, but have since fallen back to around 4.5%. Bond yields move in the opposite direction to prices.

The FTSE also opened 10.09 points (0.1%) higher at 9,619.62.

The chancellor has been drip feeding some of her policies all week, in particular around the costs of living measures.

But with mounting pressures to reduce debt, some of the hard hitting measures are most likely to be announced this afternoon. Brace!

Kalpana Fitzpatrick, editor

Will the two-child benefit cap be lifted?

The chancellor could look at lifting the two-child benefit cap today – a move which charities say would lift hundreds of thousands of children out of poverty.

The cap limits the extra amount of Universal Credit families can receive to two children and was introduced by the Conservative government in the 2015 Budget.

Households on Universal Credit with a third or more children born from 6 April 2017 do not receive extra amounts under the cap.

There are exceptions to the two-child limit, for example for parents that have had multiple births, like twins or triplets.

Sam Walker, writer

What economic circumstances is Rachel Reeves contending with?

It is no secret that today’s budget will be delivered under some difficult economic circumstances.

The UK economy grew by a paltry 0.1% in the three months to September, the latest official data shows, including a month-on-month contraction of -0.1% in September.

At the same time, unemployment is at the highest level since 2021, climbing to 5% in September. Inflation has also remained much higher than the 2% target, for most of the year. The latest figures show price growth was 3.6% in the year to October.

Amid these dreary figures, the chancellor reportedly faces a £22 billion black hole in the public finances, according to estimates by the Institute for Fiscal Studies (IFS), an influential think tank.

It means the chancellor must find an extra £22 billion just to stick to previous commitments for government spending, while keeping her fiscal headroom at £10 billion.

As the chancellor’s rules stop her from increasing borrowing to meet day-to-day government spending, this budget shortfall will need to be filled by either cutting expenditure or raising taxes.

Daniel Hilton, junior writer

BREAKING: OBR forecast released early

The Office for Budget Responsibility has reportedly published its forecast early. Usually, the forecast is released after the Budget is announced.

There is speculation that the apparent early release may have been an accident. More news to follow.

What are the chancellor’s fiscal rules?

You may hear a lot of references to ‘fiscal rules’ in the chancellor’s speech and the surrounding commentary today.

These are a set of three principles governing the public finances that Rachel Reeves has committed to sticking to as a way to keep the trust of the markets and the public.

They are entirely self-imposed, but the Office for Budget Responsibility (OBR), the UK’s official budget watchdog, calculates whether the government will meet them or not.

Rule 1: “The current budget should be on course to be in balance or surplus by 2029/30” (‘stability rule’).

This rule requires the government to ensure that the day-to-day costs of running the country are met by revenues by the 2029/30 tax year, the final one of the current parliament.

The rule was tweaked in 2024 to mean that borrowing is allowed for the purposes of investment, but still means that day-to-day spending (like of running the NHS) cannot be funded through borrowing.

Rule 2. “Net financial debt should fall as a share of the economy in 2029/30” (‘investment rule’)

This rule requires public debt to be forecast by the OBR to be lower in 2029/30 than 2028/29 in terms of GDP.

Public debt is defined as public sector net financial liabilities, or ‘net financial debt’.

Rule 3. “Some types of welfare spending must remain below a pre-specified level” (the ‘welfare cap’)

This rule adds constraints on roughly half of government welfare spending. It requires total annual welfare spending in this parliament to be at a maximum level of £194.5 billion by 2029/30.

The margin for overspend is 5%. Pension payments and welfare that are ‘most sensitive to the economic cycle’ (like Jobseekers’ Allowance) are excluded from the cap.

Daniel Hilton, junior writer

Prime Minister’s Questions is underway in the House of Commons. Prime minister Keir Starmer will answer questions from MPs for around half an hour. Chancellor Rachel Reeves should then take to the dispatch box soon after, to deliver the 2025 Autumn Budget speech.

Kemi Badenoch, the leader of the opposition, is expected to deliver her response immediately afterwards.

Mansion tax to be introduced on £2 million homes

The Office for Budget Responsibility appears to have confirmed plans for a mansion tax on homes worth £2 million and above.

The plans are set to be revealed by chancellor Rachel Reeves but seem to have been confirmed by BBC News, which has reportedly obtained an early copy of the OBR forecasts when it was published in error.

There was speculation about the new levy in the build-up to the Budget, which is effectively a wealth tax.

But critics will likely label it a levy on London and the South East, where most £2 million homes are situated.

A mansion tax could also cause a freeze at the top-end of the property market. Rightmove data shows sales agreed for £2 million-plus homes are already down 13% year-on-year.

Marc Shoffman, contributing editor

Reeves extends ‘stealth tax’ until 2030, breaking previous commitment

The freeze on income tax thresholds has been extended until 2030, according to the BBC. The organisation has reportedly obtained an early copy of the OBR’s budget report seemingly in error.

MoneyWeek has approached the OBR for confirmation that the forecast has been leaked early, and apparently by accident. As yet, we have not received a reply.

New tax to be levied on electric vehicle drivers

Electric vehicle (EV) drivers are set to pay a new tax for each mile they drive, according to the OBR’s leaked report, as reported by the BBC.

The complete details have not yet been confirmed, but the report says the new mileage-based charge will be “around half the fuel duty rate paid by drivers of petrol cars (raising £1.4 billion)".

Drivers of petrol and diesel vehicles have to pay fuel duty when they fill up, charged at around 53p per litre. The new EV tax is designed to bring their taxation closer in line with typical vehicles.

Household energy bills to be cut

Households gas and electricity costs will be lowered through cuts to green levies on energy bills, the BBC reports.

It will cost around £2.3 billion, according to the OBR.

Two-child benefit cap lifted

The two-child benefit cap, which limits the amount of Universal Credit families can receive, will be lifted, according to the BBC. The OBR has reportedly estimated this will cost £3 billion by 2029/30.

Estimates from the Child Poverty Action Group have suggested lifting the cap would lift 350,000 children out of poverty and mean 700,000 are in less deep poverty.

Government fiscal headroom will grow to £22 billion

The early release of the OBR’s report suggests the chancellor will increase the government’s ‘fiscal headroom’ to £22 billion, up from its current level of £10 billion, the BBC reports.

OBR: Inflation to be higher than expected in 2025 and 2026.

Inflation is set to be 3.5% in 2025, according to the BBC, based on the OBR’s early leaked report.

The new forecast is higher than their previous expectation of 3.2%, which the OBR made in March.

Inflation is also expected to be higher in 2026, reaching a level of 2.5% according to the OBR. This is above their previous expectation of 2.5%.

The OBR maintains its forecast that inflation will be 2% in 2027.

OBR downgrades growth predictions

The Office for Budget Responsibility (OBR), the UK’s independent budget watchdog, has degraded its GDP growth forecast, according to the BBC.

The watchdog now expects GDP to grow by 1.5% on average over the five year forecast period, ending in the 2029/30 tax year, 0.3 percentage points slower than they anticipated in March.

Fuel duty frozen until September 2026

Fuel duty will be frozen at its current rate until September 2026, the BBC reports the OBR says.

The headline rate on standard petrol and diesel is currently 52.95p per litre.

Sam Walker, writer

OBR apologises for leaking forecast early

The OBR has apologised for leaking its forecast ahead of Rachel Reeves’s Autumn Budget announcement.

A statement on the OBR’s website reads:

“A link to our Economic and fiscal outlook document went live on our website too early this morning. It has been removed.

“We apologise for this technical error and have initiated an investigation into how this happened.

“We will be reporting to our Oversight Board, the Treasury, and the Commons Treasury Committee on how this happened, and we will make sure this does not happen again.

“Our Economic and fiscal outlook and supporting documents will be released when the Chancellor has finished her speech.”

Should we have had Budget leaks?

I am seriously thinking of getting my ears checked – at 12:05 I heard the Prime Minister Keir Starmer say details will be released “in 25 minutes” yet a few minutes soon after he said that it seems like the Office for Budget Responsibility then leaked its report to various media outlets, including the BBC.

This report is usually released AFTER the chancellor makes her speech - such a leak has not happened before. Some reports of what Rachel Reeves is about to say are now out - but Reeves has yet to speak.

The OBR has since apologised - but this has clearly been a Budget of leaks, causing anxiety and uncertainty. Are such leaks ever acceptable?

Kalpana Fitzpatrick, digital editor

Pension savers to be hit with salary sacrifice cap

Rachel Reeves is set to announce a cap on salary sacrifice schemes in a new blow for pension savers.

An Office for Budget Responsibility forecast, published in error and seen by BBC News, suggests the Autumn Budget will introduce a £2,000 cap on the amount of earnings that can be exchanged for pension contributions that benefit from a National Insurance exemption. This will come in from April 2029, according to the OBR.

Marc Shoffman, contributing editor

Reeves begins 2025 Budget speech

Reeves has begun her Budget speech. Much of the chancellor’s Budget has been reported ahead of this speech, after the OBR report was published in error earlier today. Reeves called it a “serious error” on the OBR’s part.

Leaked OBR report ‘deeply disappointing’ and a ‘serious error’, says Reeves

Rachel Reeves has slammed the OBR for releasing their Budget report early in error.

She said: “This is deeply disappointing and a serious error on their part. The Office of Budget Responsibility have already made a statement taking full responsibility for their mistake.”

Cash ISA limit cut to £12,000 – but not for over 65s

The annual cash ISA allowance will be reduced from £20,000 to £12,000 from April 2027 as the chancellor bids to push savers towards the stock market. However, over 65s will retain the full cash ISA allowance.

The overall allowance of £20,000 per year isn’t changing, so savers will still be able to spread their money across multiple ISA accounts up this limit.

However, Reeves may still have to convince members of the public to take a more investment-heavy approach with their savings.

Recent research polling by Paragon Bank of 1,400 cash ISA savers, found the majority would not invest in stocks and shares and would switch to regular savings accounts instead, despite this potentially driving up their income tax bill.

Sam Walker, writer

Stamp duty holiday for London IPOs

In a bid to use her Autumn Budget to boost the UK’s beleaguered stock market, Reeves has announced a three-year exemption from stamp duty for companies listing on the London Stock Exchange (LSE).

The LSE has struggled to attract high-profile companies to list on the exchange even when they are based in the UK. Unilever’s anticipated spin-off of its ice cream business will see Amsterdam land the primary listing, while neobank Revolut – Europe’s most valuable private company following a funding round that valued it at $75 billion – appears to favour listing in the US over the UK.

Investors currently have to pay 0.5% stamp duty whenever they buy UK-listed shares, but Reeves has waived this for newly-listed companies.

“This would make buying British more enticing for investors and help redress some businesses’ concerns about demand for UK shares,” said Emma Wall, chief investment strategist at Hargreaves Lansdown. “London has been losing out to New York in recent years, as businesses favour the funding and regulatory environment of the New York Stock Exchange.”

Dan McEvoy, senior writer

OBR downgrades productivity growth forecast

The OBR has downgraded their forecasts for productivity growth. The downgrade will cost the economy £16 billion.

The chancellor said the blame for this lies at the feet of the Conservatives, and promises to defy the forecast.

Chancellor announces multi-million playground makeover

Local communities are set to receive an £18 million funding package to help revamp their playgrounds.

The funding will target 200 children’s play parks across England in a bid to “breathe new life into play areas across England, creating safe, exciting spaces for thousands of children”.

The government says the funding will help ensure every child can enjoy the benefits of playing outdoors as research shows poorer children spend much less time outside than richer ones.

Daniel Hilton, junior writer

Chancellor’s £5 million books boost for secondary schools

Millions of pounds in new funding will become available to secondary schools in England to help them revitalise their school libraries.

The chancellor announced a £5 million funding package that will allow all secondary schools across the country to spend around £1,400 each on books, incentivising children to get off their phones and read instead.

The funding comes at a time when reading for pleasure is in sharp decline among young people, with the number of 8 to 18 year olds saying they enjoy reading in their spare time falling by a third since 2019.

Daniel Hilton, junior writer

Gilt yields swing following pre-Budget leak

Gilt yields – in effect, the interest paid on UK Government debt – initially fell following the leak of the OBR’s report.

Yields on 10-year gilts fell from around 4.50% to 4.43% at approximately 11.45am.

But they have since risen back to above their level before the leak – now standing at 4.52% as of 12.44pm.

Lower yields indicate greater bond market confidence in the UK government as a borrower, and vice versa.

The initial dip perhaps reflects optimism based on the policies announced in the Budget, but the reversion likely implies pessimism over the longer term outlook for productivity.

Overall, though, gilt yields are little changed from before the OBR forecast’s release.

“We’ve seen a relatively orderly reaction in gilts and the pound to the details of the budget so far,” said Matthew Ryan, head of market strategy at Ebury. “Market participants will be breathing a sigh of relief that the chancellor appears to have learnt from past mistakes, and will instead be affording herself a larger fiscal headroom in excess of £20 billion, as opposed to the razor-thin one we saw last year.”

Carrot and stick approach to ISAs

Cash ISAs will be limited to £12,000, and if you want to take advantage of the full £20,000 allowance then you will need to invest the rest.

This isn’t quite as bad as the ‘cut’ we anticipated, and it still leaves savers with a choice.

But this will still require some convincing and education. I’ll also be interested in knowing how this would work in practice, and will we see new ISA products launched? Possibly, yes.

Kalpana Fitzpatrick, digital editor

250 new Neighbourhood Health Centres to be built

The government is set to open 250 new ‘Neighbourhood Health Centres’ in the country to help improve healthcare access.

The centres, which will bring together GPs, nurses, dentists and pharmacists under one roof, will be first built in the most deprived areas of the country.

The government hopes that opening the new centres will cut NHS waiting lists and “bring an end to the postcode lottery of healthcare access”.

Daniel Hilton, online writer

Reeves extends income tax threshold freeze

Chancellor Rachel Reeves has extended the freeze on income tax thresholds from 2028 to 2031.

The move means workers will pay more tax when their salaries increase, as more of their pay is dragged into higher tax bands, leading some to label it a ‘stealth tax’.

She said: “The previous Conservative government froze personal tax thresholds from 2021 to 2028 and today I will maintain all income tax and equivalent National Insurance thresholds at their current level for a further three years from 2028.

“I know that maintaining these thresholds is a decision that will affect working people. I said that last year, and I won't pretend otherwise. Now, [...] I'm asking everyone to make a contribution.”

It means tax bands in England, Wales and Northern Ireland will remain at the following levels until the end of the 2029/30 tax year:

Source: HMRC

Income tax bands are different in Scotland.

Tax thresholds have historically risen with inflation, meaning workers paid tax on the same proportion of their earnings in real terms each year.

However, since the 2022 tax year, thresholds have been frozen at their 2021/22 levels. This raises tax receipts through a phenomenon known as ‘fiscal drag’.

The government had previously stated this freeze would end after the 2027/28 tax year, but today’s announcement means fiscal drag will continue for longer than expected.

Figures from HMRC recently showed that in the last year alone, more than a million Brits were dragged into higher tax bands because of the threshold freeze.

Daniel Hilton, writer

Class 2 National Insurance contributions abolished for people living abroad

The government is removing access to the cheapest Class 2 Voluntary National Insurance contributions (VNICs) for individuals living abroad and increasing the initial residency or contributions requirement for VNICs to 10 years.

Tax hike for property, dividend, and savings income to rise

The chancellor has confirmed rumours that tax on income from property, dividends and savings interest will be increased, rising by two percentage points.

The change will affect all taxpayers with income from these sources, on both the basic and higher rate of income tax.

Reeves said the measure will narrow the gap between the tax on income from assets and income from work.

“Even after these reforms, 90% of taxpayers will still pay no tax at all on their savings,” she added.

Daniel Hilton, writer

Mansion tax confirmed for £2 million homes

Rachel Reeves has confirmed details of a new mansion tax for homes worth £2 million and above.

From April 2028, owners of properties identified as being valued at over £2million by the Valuation Office (in 2026 prices) will have to pay a recurring annual charge on top of their current council tax.

There will be four price bands with the High Value Council Tax Surcharge rising from £2,500 for a property valued in the lowest £2 million to £2.5 million band to £7,500 for a property valued in the highest band of £5 million or more, all uprated by CPI inflation each year. This measure is estimated to raise £0.4 billion in 2029-30.

The levy is likely to cause blockages at the higher end of the property market though.

Tom Bill, head of UK residential research at Knight Frank, said: “Until the revaluations take place, buyers and sellers face years of uncertainty, especially around the £2 million threshold. Even once completed, new valuations can be challenged, which would prolong the limbo.

“The policy may also raise less than expected, especially because it is deferrable. If opposition parties say they would scrap it, many homeowners will look at the opinion polls and wait it out. When you factor in the cost of carrying out the valuation and the potential lost stamp duty revenue from a stickier market, the sums raised could look like a rounding error for the Treasury.

“More properties will inevitably get dragged into the mansion tax net, which means the proportion of terraced houses, flats and semi-detached homes will grow over the years, particularly in the capital. The term ‘mansion tax’ will increasingly feel like a misnomer.

“Overall, it feels like politics has trumped economics. One the one hand, the policy is designed to keep backbenchers happy and ensure the near-term survival of the chancellor and prime minister. On the other hand, it throws a spanner into the works of the housing market for not much money in return, which is important in the context of a Budget where spending is front-loaded. The UK already pays the highest percentage of property taxes among OECD countries.”

Marc Shoffman, contributing editor

£2,000 salary sacrifice cap confirmed

Chancellor Rachel Reeves has confirmed plans to introduce a £2,000 cap on the amount of earnings that can be exchanged for pension contributions that benefit from a National Insurance exemption.

It will be introduced from April 2029.

Introducing the cap could reportedly raise up to £2 billion a year but it will have an impact on the amount employees can save into a pension from their post tax income, ultimately affecting their take-home pay if they want to continue putting money into their workplace scheme.

Contributions above the cap will be taxed in the same way as other contributions.

Employers may also have less incentive to offer benefits, plus this could raise fears of other salary sacrifice schemes being targeted in the future such as bike to work and company car benefits.

AJ Bell has previously warned that the pensions of higher earners could be £50,000 smaller due to the salary sacrifice changes.

Steve Hitchiner, chair of the tax Group at the Society of Pensions Professionals (SPP) said: “Restricting salary sacrifice for pensions will affect the take home pay of millions of employees – especially basic rate taxpayers – and is a tax on working people, in spirit if not in name. It is also another sizeable cost to employers and, perhaps most importantly its restriction will reduce pension saving.”

Marc Shoffman, contributing editor

Cash ISA cuts – pros and cons

Cuts to the annual cash ISA allowance was shaping up to be one of the most divisive policies ahead of the Autumn Budget. Reeves appears to have struck something of a compromise by cutting the annual allowance to £12,000, but exempting over-65s who, understandably, may want to take fewer short-term risks with their money.

“This is a carefully considered solution that promotes the benefits of investing in the stock market for the long term, whilst addressing concerns of older savers who prioritise financial certainty,” said Richard Stone, CEO, Association of Investment Companies.

But Harriet Guevara, chief savings officer at Nottingham Building Society, calls the cut to the cash ISA limit “a deeply disappointing outcome for both savers and lenders”.

“We support the government’s aim to boost an investing culture in the UK,” she added, “but restricting choice is not the way to do it.”

Dan McEvoy, senior writer

EVs to be subject to new 3p per mile tax

Drivers of electric vehicles will now have to pay a flat tax of 3p per mile, bringing taxation of EVs more in line with typical vehicles.

Fully electric vehicles will be subject to the 3p per mile tax, while plug-in hybrid vehicles will have to pay 1.5p per mile.

It is estimated that the new tax will cost the average driver of a fully electric car approximately an extra £250 a year.

Daniel Hilton, writer

Electric vehicle grant extended

After announcing the new set of EV taxes, the chancellor eased the pain slightly by extending the UK’s new electric car grant until 2030.

The grant currently subsidises the price of a new EV by between £1,500 and £3,750 depending on the model.

Daniel Hilton, writer

Reeves confirms no change to income tax

It was widely trailed before the Budget but Reeves has now confirmed herself that income tax – as well as the other two ‘big three’ taxes – won’t be raised (beyond the extension to the income tax threshold freeze).

“I can confirm that I will not be increasing National Insurance, the basic higher or additional rates of income tax or VAT,” said Reeves.

“I have kept everyone's contribution as low as possible through reforms to make our tax systems stronger, closing loopholes, ensuring that the wealthiest pay their share, and building a tax system that is fairer,” she added.

Dan McEvoy, senior writer

Rail fares to be frozen for the first time in 30 years

Rail fares will be frozen at current levels for the first time in 30 years, meaning all regulated rail tickets, including season tickets, peak returns, and off–peak returns, will remain the same price next year.

The Treasury says the freeze could save commuters on more expensive routes upwards of £300 a year, assuming they commute to the office three times a week.

Without a freeze, rail fares were set to increase by 5.8% in 2026.

Daniel Hilton, junior writer

Two-child benefit cap to be lifted

The government has confirmed the two-child benefit cap will be lifted, which charities have said could lift hundreds of thousands of children out of poverty.

The cap limits the amount of extra Universal Credit families with children can receive. The cap was first introduced by the then Conservative government in 2015.

Helen Barnard, director of policy at charity Trussell, said: "This move will protect hundreds of thousands of children from growing up facing hunger and hardship.

"It shows that the chancellor has listened to families and food banks across the UK who have been imploring her to act."

Sam Walker, writer

State pension to increase by 4.8%

Thirteen million pensioners will receive a pay rise next April after the chancellor confirmed the state pension will rise by 4.8%.

Those on the full new state pension will see their weekly payments go up from £230.25 to £241.30 (£12,547 a year) under the triple lock mechanism – a rise of more than £550 per year.

The full basic state pension weekly amount will go up from £176.45 to £184.91 (£9,615 a year) – an increase of just under £440 a year.

Because the new tax year starts on 6 April 2026, you won’t get the new rate until your first pay date after this date.

Sam Walker, writer

Fuel duty frozen until September 2026

The chancellor confirmed the freeze to fuel duty will be kept in place until September 2026.

The freeze has been in place since 2011/12, meaning the headline rate on standard petrol and diesel is 52.95p per litre.

Sam Walker, writer

Reeves to cut energy bills by £150 by ending green levies

The chancellor has announced that the average annual energy bill will be cut by £150 from April 2026 onwards.

This will be done by removing the “Eco scheme”, a green levy added to energy bills, first introduced by the Conservatives.

Daniel Hilton, writer

Kemi Badenoch: Budget is a “total humiliation” and Reeves should resign

Kemi Badenoch, the Leader of the Opposition and leader of the Conservatives, will now respond to the Budget.

She opened her speech by calling the Budget a “total humiliation” and slammed the chancellor for “coming back for more” taxes.

She said: “Last year, she put up taxes by £40 billion, the biggest tax raid in British history. She promised that she wouldn't be back for more. She swore it was a one-off. She told everyone that from now on, it would be stability, and she would pay for everything with growth. Today, she has broken every single [promise].

“If she had any decency, she would resign,” she added.

Daniel Hilton, writer

Deutsche Bank: ‘Cost of living’ Autumn Budget increases headroom and reduces borrowing

Zooming out, today’s Autumn Budget – despite seeing the third-largest amount of tax increases since 2010 – appears to achieve three things, according to Sanjay Raja, chief UK economist at Deutsche Bank.

Firstly, it should keep government borrowing on a downward trajectory. “The UK’s budget deficit is expected to drop from 4.5% of GDP to 3.5% next fiscal year,” says Raja. “It is expected to drop to just under 2% of GDP by the end of the decade.”

Secondly, it has surprisingly doubled the chancellor’s fiscal headroom from £10 billion to just under £22 billion.

Thirdly, Raja expects the Budget to be disinflationary. “Budget policies are projected to reduce CPI by 0.4 percentage points in 2026/27,” says Raja. “This is reflected by a partial extension of the fuel duty freeze, reducing green levies, and a one-year freeze to rail fares.”

Dan McEvoy - senior writer

Administrative burden for pensioners on just state pension to be eased

Retirees whose sole income is the state pension will be spared the burden of having to pay very small amounts of income tax from April 2027 if the state pension exceeds the personal allowance, the chancellor announced.

It comes as the state pension is set to breach the tax-free personal allowance in 2027, according to the OBR. Without the policy, retirees whose only income is the state pension face having to pay income tax for the first time, via simple assessment.

No concrete method for implementing this has been confirmed yet, but the government says it is “exploring the best way to achieve this and will set out more detail next year”.

Daniel Hilton, writer

Benefits fraud: Plans to save over £1 billion on benefit fraud and error

Budget documents confirmed the government will extend a taskforce cracking down on fraudulent Universal Credit claims.

The Targeted Case Review scheme, first set up in 2022, will now close in 2031.

Fraudulent benefit claims cost the government £6.5 billion in the 2024/25 financial year, with £5.2 billion made up of fraudulent Universal Credit claims.

It comes as the DWP aims to keep a lid on the ballooning welfare bill, with forecasts predicting health and disability benefits will cost the government £70 billion by the end of the decade.

Sam Walker, writer

Hundreds more planners to get Britain building

The government will pump £48 million of additional funding into recruiting an extra 350 planners in England.

The planners will reportedly be brought in across both graduate and experienced roles.

Reeves is also said to be planning to unveil plans for a new Planning Careers Hub to retain planners and draw more people into these types of roles.

Sam Walker, writer

Care leavers guaranteed up to £13,500 in student loan support

All care leavers, young people who have left the care system, will be guaranteed the full student maintenance loan amount of £13,500 per academic year.

Just 14% of care leavers go to university, compared to 50% for the wider population, and they are much more likely to drop out.

The government says this is often due to financial barriers – the new loan guarantee will seek to address this issue.

Daniel Hilton, junior writer

Autumn Budget summary

Well there you have it. No rabbit in the hat though. The Autumn Budget started in an unusual way as the Office for Budget responsibility leaked its report a whole 20 minutes before the chancellor’s speech.

While this was certainly a Budget that protected vulnerable households, shielding them from the increasing cost of living. But, for everyone else, taxes are up and those with more wealth will pay more.

Here’s a quick summary:

• Cash ISA reforms. For cash savers, savings will be limited to £12,000. To take advantage of the full £20,000 allowance, you will have to invest the rest. Over 65s will see no change and keep the full £20,000 allowance.
• Salary Sacrifice pensions capped. There will be a £2,000 salary sacrifice cap confirmed - the amount of earnings that can be exchanged for pension contributions that benefit from a National Insurance exemption.
• Mansion Tax. Owners of properties worth over £2 million will have to pay a recurring annual charge on top of their current council tax. There will be four price bands with the new ‘High Value Council Tax Surcharge’ rising from £2,500 for a property valued in the lowest £2 million to £2.5 million band to £7,500 for a property valued in the highest band of £5 million or more, all uprated by CPI inflation each year.
• Tax hike on income from property, dividend, and savings by two percentage points. The change will affect all taxpayers. But she claimed 90% of taxpayers will still pay no tax at all on their savings.
• Income tax threshold freeze extended, from 2028 to 2031.
• People based abroad will no longer be able to make Class 2 National Insurance contributions.
• Two-child benefit cap to be lifted, which Reeves said will help tackle child poverty
• Electric vehicle (EV) grant extended to 2030, but EVs will be subject to new 3p per mile tax.
• Energy bills to drop by £150 from April 2026 as green levies cut.

Kalpana Fitzpatrick, digital editor

Lifetime ISA reform?

Budget documents have revealed the government will publish a consultation in early 2026 on the roll out of a new, "simpler", ISA product to help first-time buyers get a home.

Once launched, this new ISA product will be offered in place of Lifetime ISAs.

Currently, savers can add £4,000 per year into a LISA and get a 25% bonus on top from the government, up to a maximum of £1,000 a year. Any savings must be used to put down a deposit for a house that costs £450,000 or less or for retirement, otherwise you pay a 25% penalty.

However, the savings product has its critics, with some arguing the £450,000 limit for a house is not high enough for people buying in areas where property prices are above the UK average, such as London.

The £450,000 limit has also been frozen since the LISA was launched in 2017, despite house prices growing significantly since then.

Sam Walker, writer

A twist in the cash ISA limit shake-up

How much did the Budget raise taxes by?

The full Budget has now been delivered by Rachel Reeves, and the supporting documents from the Treasury and Office for Budget Responsibility (OBR) have been published.

Thanks to a slew of tax hikes, the chancellor will now have £26 billion more in tax revenue in 2029/30, according to the OBR, bringing the tax take to an all-time high of 38% of GDP in 2030/31.

The biggest chunk of this comes from the extension of the freeze on income tax thresholds until 2031, raising £8.3 billion in 2029/30.

The charging of National Insurance on salary sacrificed pension contributions is estimated to bring in around £4.7 billion in 2029/30. Increases to income tax rates on property, savings, and dividends will bring in a further £2.1 billion in 2029/30.

The rest of the revenue will be raised by the other measures announced in the Budget.

Daniel Hilton, writer

What do you think about Reeves’s Budget?

Over to you – what do you think about the announcements today? Have your say by voting in our poll below.

Recap: the Autumn Budget headlines

Here’s a quick recap of some of the major headlines that have come out of today’s Autumn Budget announcement:

• Mansion tax to apply to properties valued at over £2 million
• Cash ISA limit cut to £12,000
• Salary sacrifice on pension contributions limited to £2,000 before National Insurance payments kick in
• Higher tax rates on income from property, savings and dividends.

Of course, there are plenty of holes to pick in the specific measures that Reeves has taken. Not everyone is going to be happy when an extra £26 billion in taxes are announced.

As MoneyWeek’s digital editor Kalpana Fitzpatrick says, when considering the Budget’s winners and losers Reeves seems to have taken pains to ensure that the most financially vulnerable are shielded, and those that can pay will pay.

And the markets seem encouraged. The extra fiscal headroom has seen government borrowing costs fall markedly through today, while the FTSE 250 has gained nearly 1%.

Thank you for joining us

So, there we have it. Rachel Reeves has unveiled the 2025 Autumn Budget, increasing taxes by around £26 billion, according to the Office for Budget Responsibility (OBR).

From the new mansion tax to the tax hikes on property, savings, and dividend income, MoneyWeek writer Daniel Hilton covers the key takeaways from the Budget in a separate piece.

Thank you for joining us for our 2025 Autumn Budget coverage today.

Keep following MoneyWeek for further analysis and reaction to the Budget. You can get our top stories delivered directly to your inbox by signing up for the MoneyWeek newsletter.

Good morning and welcome back to MoneyWeek’s 2025 Autumn Budget coverage.

Chancellor Rachel Reeves delivered a wealth of tax hikes in yesterday’s speech.

As well as targeting wealthy homeowners with a new mansion tax (effective from April 2028), the chancellor extended the freeze on income tax thresholds by three years. She also capped National Insurance contributions relief on salary sacrifice into pension schemes to £2,000. The latter measure will come in from 2029.

Stick with MoneyWeek as we bring you more reaction and analysis today.

Rachel Reeves defends extension to tax threshold freeze

Rachel Reeves has addressed her decision to freeze income tax thresholds by three years. The Conservative government had frozen the thresholds until 2028, but the Labour chancellor extended the measure until 2031 in the Autumn Budget yesterday.

“I recognise that freezing thresholds does mean that we are asking ordinary people to contribute a bit more,” Reeves told BBC News today.

The chancellor said she had “kept the contribution to a minimum by changes elsewhere” and acknowledged that continuing the threshold freezes would impact working people.

“I’m not seeking to deny that," she added, "but I believe I made the fair and necessary choices yesterday to ensure we can cut the cost of living, cut NHS waiting lists and also reduce our debt and borrowing and hopefully give space to the Bank of England to cut interest rates further.”

Inheritance tax thresholds frozen until 2031

The inheritance tax (IHT) nil-rate bands will be frozen for a further year until April 2031, from April 2030, Budget documents reveal.

The IHT nil-rate band has been frozen at £325,000 and the residence nil-rate band is held at £175,000. It means families risk paying more IHT in the future as the value of assets rises.

Recent polling by Hargreaves Lansdown found 7% of people were most concerned about changes to IHT being announced in the Budget.

Sarah Coles, head of personal finance at the investing platform, said yesterday: "Nobody likes the idea of the taxman dipping into your pockets after you’ve died, so today’s news won’t be welcome."

Sam Walker, writer

Savers at risk of paying more tax as cash ISA cut and savings tax rate to be hiked

Millions of savers may face paying more tax on their savings in coming years, due to the chancellor’s cut to the cash ISA allowance.

From April 2027, under 65s will only be able to put £12,000 a year into a cash ISA, rather than the current £20,000 per year limit.

7.1 million people put money in a cash ISA in 2022/23, with just over two million (28%) putting more than £12,000 into this type of account, analysis by InvestEngine shows.

These two million savers could now face paying tax on savings interest once they exceed their personal savings allowance, if they continue saving above the new £12,000 cash ISA limit.

Savers who are 65 or older can continue putting up to £20,000 – the overall ISA allowance – into a cash ISA, if they wish to.

The personal savings allowance lets basic rate taxpayers earn £1,000 in savings interest outside of an ISA. The allowance is cut to £500 for higher rate taxpayers. Additional rate taxpayers don’t get a personal savings allowance.

The tax rate on savings income will rise by two percentage points across all bands from April 2027, meaning basic rate taxpayers will need to pay a 22% levy on savings interest above the personal savings allowance – unless the money is in a tax-free savings vehicle, such as an ISA or Premium Bonds.

The top easy access savings account currently pays an interest rate of around 4.5%.

If a basic rate taxpayer put £12,000 in a cash ISA, and held £8,000 – the difference between £20,000 and the new £12,000 limit – in a top non-ISA savings account, they would face having paid hundreds of pounds in tax after five years, analysis suggests.

Figures by InvestEngine and MoneyWeek compare how much tax on savings interest would be due in five years based on the previous savings tax rate and the hiked rate after April 2027.

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, said: “For committed savers, that want to continue saving more than £12,000 into a cash ISA, investing their money in the financial markets is one solution, provided they don’t need access to their money in the short term.”

The overall ISA allowance remains at £20,000, meaning if you maximise the cash ISA allowance, you could still put £8,000 into a stocks and shares ISA in the same tax year.

Haine added: “Equities have historically delivered higher real returns – that beat inflation – than cash over the long term.”

A time horizon of at least five years is recommended for investing in equities via a stocks and shares ISA.

Jessica Sheldon, deputy digital editor

OBR: New per mile EV tax will significantly slow sales

The government’s new 3p per mile tax on fully electric vehicles will mean hundreds of thousands fewer electric cars will be on UK streets by 2030/31 than expected, according to analysis by the Office for Budget Responsibility (OBR).

The new levy, which will come into effect in April 2028, will mean average drivers of fully electric cars could pay an extra £225 a year to the taxman. A reduced rate of 1.5p per mile will be paid by those with plug-in hybrid cars.

The UK’s fiscal watchdog said they expect the tax to raise around £1.1 billion in the 2028-29 tax year, and £1.9 billion in the following tax year.

However, they added that the measure is “likely to reduce demand for electric cars” as it increases the average lifetime cost of running an EV.

This will lead to a significant slowdown in sales, with the OBR expecting 440,000 fewer electric car sales by 2030/31.

Melanie Lane, chief executive of EV charging provider Pod, said the policy “will shake consumer confidence and potentially jeopardise investment in the sector at a critical moment”.

The chancellor announced the electric car grant will be extended until at least 2030, potentially further complicating government incentives to switch to zero-emissions vehicles.

Lane added: “We are already falling behind on the ZEV mandate that expects one in three cars sold to be zero-emissions next year and confirmation of additional mileage costs from 2028 will penalise motorists and manufacturers who are fulfilling their end of the bargain.”

Details of how the policy will be policed are yet to be published, but the government has started a consultation. They say they expect mileage to be self-reported, possibly at a car’s annual MOT.

Daniel Hilton, writer

Has the Budget cleared the path for UK stocks?

UK-listed stocks gained yesterday in the wake of the Budget and the OBR forecast. The FTSE 100 gained nearly 0.9% and the FTSE 250 – which is more exposed to the UK economy as it contains more small, domestically-focused companies compared to the large multinationals of the FTSE 100 – gained 1.2%.

“Expectations running into the budget were very low, sentiment very weak, and valuations of especially domestic and smaller companies in the UK [were] very suppressed,” said Richard Knight, portfolio manager at Merchants Trust.

There were a number of key wins the Budget was able to score as far as UK stocks were concerned. Increased fiscal headroom ought to alleviate some of the concerns about future tax rises. The Budget is also thought to be disinflationary on balance, which should encourage future interest rate cuts from the Bank of England.

Rate cuts would be “a significant positive stimulus for the UK economy and stock market” according to Knight. “We are seeing great opportunities in midcaps in particular, as they are over-sold, and sensitive to the pessimism around the UK, a great degree of which is priced-in to market valuations,” he added.

See our explainer on what the Budget means for the UK stock market for more information.

Freeze on income tax thresholds could cost taxpayers £1,300

The government's extension to a freeze on income tax thresholds could add an extra £1,292 to someone's tax bill by 2031.

Someone with a yearly income of £15,000 today faces stumping up an extra £259 over the three years between 2028 and 2031, according to analysis by AJ Bell.

Someone on £45,000 a year will take a hit of £683, while a taxpayer with an annual income of £47,000 will have to fork out an extra £1,292.

Laura Suter, head of personal finance at AJ Bell, said: "While it’s a nifty way for the government to raise money, the cumulative effect of the freeze means people are seeing their tax bills rise dramatically when compared to a system in which thresholds had increased by inflation each year."

Test your Autumn Budget knowledge

As taxpayers digest what the announcements will mean for them, Rachel Reeves and Keir Starmer have been defending the tax-raising Autumn Budget.

Starmer told Sky News today: “We kept to our manifesto in terms of what we promised but I accept the challenge that we've asked everybody to contribute."

The prime minister said the Budget measures would help protect the NHS, put money into schools and bear down on the cost of living.

From tax threshold freezes to a cut to up-front tax relief on VCT investments, how closely were you following the headlines?

Test your knowledge by taking part in our Autumn Budget quiz.

That concludes our live coverage of the Budget – one of the most eventful we can remember. We will continue unpacking what the Budget will mean for you, so keep a close eye on the MoneyWeek website. Sign up to the MoneyWeek newsletter to get the top stories delivered directly to your inbox.

Thank you for joining us.

Savers are being warned over cash ISAs that came with a bonus rate.

As of the end of October, five of the top 10 paying instant access cash ISAs offered bonus rates, rising to nine of the top 25, according to Moneycomms analysis for Investec Save.

The average bonus rates offered across these accounts over the first 12 months was 1.68%, ranging from as low as 0.49% to 3.16%. The bonus rates made the ISAs competitive and are a great incentive to draw savers in.

But once the bonus rates expired, these cash ISAs fell down the rankings - just two ranked in the top 50 and seven dropped out of the top 100.

Andrew Hagger, from Moneycomms, said: “The use of bonus rates in the cash ISA market is quite commonplace but there is a big downside for consumers who forget to switch. If you don’t remember to move your money upon bonus expiry your cash could be earning as little as 1% in some cases.”

If you signed up to an ISA with a bonus rate over 12 months ago, now is the time to switch. See our round up of the best cash ISAs for the latest deals on the market now.

Not all providers let you transfer your cash ISA across to them, but if they do, it’s a relatively straightforward process. You just have to request the transfer by filling out a form provided by the ISA provider you’re transferring to.

Make sure you factor in any early withdrawal penalties for transferring your any cash from a fixed-term ISA account.

Cash ISAs in the spotlight

This could be a good time to review your cash ISA, especially as the chancellor Rachel Reeves is reportedly looking to slash the cash ISA allowance from £20,000 to £12,000 in the Autumn Budget.

The chancellor could cut the limit in a bid to get savers putting more of their cash into stocks and shares instead, in a bid to boost the economy.

Recent analysis from investment platform AJ Bell found a one-off investment of £1,000 in 1999 would now be worth £6,285 if invested in the average North America fund, compared to just £2,079 if held in the average cash ISA.

Even UK equity funds, despite two decades of market challenges, would have grown the original £1,000 to £3,787, comfortably beating cash returns and inflation over the same period, AJ Bell said.

Andrew Gall, head of savings at the Building Societies Association, said: “We support efforts to help more people to invest and grow their wealth, especially in the UK, but cutting the cash ISA limit simply won’t achieve this.

“Instead it would undermine one of Britain's most successful savings products and a stepping stone that has helped millions to build financial resilience and confidence to invest for their future.”

Speculating about what will be in this year’s Budget is fairly pointless, not least because the plans clearly change every few days. But the persistent chatter that the chancellor would like to coerce or persuade private investors to hold a minimum level of UK stocks in their individual savings accounts (ISAs) is worth a brief thought. To declare my bias, I think this idea is daft and not just because of the headache of deciding what’s British enough. International miner Anglo American after it moves its headquarters to Canada? An investment trust with half its assets in Asia? An exchange traded fund that tracks the S&P 500? The ISA rules are already full of nonsense – we don’t need any more.

The idea that ISA tax relief should be a quid pro quo for investing in British stocks misses the point. ISA and pension tax relief exists to get people to put aside money for their retirement and other needs. That money should be invested according to the balance of risk and reward for each investor. If that means no UK stocks, that is still the right outcome. If the government wants to save the UK market, it should work out why firms don’t want to list and investors don’t want to invest voluntarily, and fix that. Coercion is never going to be a better option than solving the underlying problems.

ISA investors are already heavily invested in the UK stock market

Yet it still raises a good question. What is a neutral level of investment in British stocks? Well, the UK is about 3.5% of the MSCI World index of developed markets. That’s a starting point. However, these indices have their own skews: they are affected by the high valuation of US markets (America is now 73% of the MSCI World) and by restrictions such as free float. For a different perspective, look at equal weight indices, where valuations and free float don’t matter: instead, they broadly reflect the number of stocks in each market and so the number of opportunities available for investment. The MSCI World Equal Weighted index has about 5.5% in the UK (the US is about 41%).

So one way of looking at this is that neutral exposure to the UK is somewhere around 5%. It would be less if we factor in emerging markets, but we get into some complications over access restrictions, so let’s keep this simple.

How much does a typical ISA investor hold? You’d think this would be easy to answer, but it’s not. While HM Revenue & Customs asks ISA managers to report how much is held in different investments, the categories it asks for are a baffling, outdated and overlapping hotchpotch that at no point simply says “UK shares”. However, ISA investors have 23% of their total holdings in UK equities and by inference about a third of their equity holdings in the UK, according to data compiled by the Investment Association and provided to Bloomberg. You can find other figures, but the story is consistent: ISA investors are already overweight the UK. Maybe that makes sense – the UK has held its own against the world ex USA in recent years. But we don’t need to be forced to hold more.

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