Cash ISA changes: Can Reeves create the culture shift needed to get savers to start investing?
Rachel Reeves will reportedly cut the cash ISA allowance this month - but, without a significant campaign to encourage investing, a limit on cash ISAs will not shift the deep and culturally embedded mindset that stops people from investing in the first place, says Kalpana Fitzpatrick


Savers have been left in limbo for months – is the cash ISA staying, going or simply subject to a tweak?
It is widely reported, but not confirmed by the Treasury, that we can expect the future of the cash ISA to be sealed at the Mansion House speech on 15 July.
Chancellor Rachel Reeves is expected to limit the amount you can put into cash ISAs to £5,000 instead of £20,000. The fear has already prompted savers to stuff more into cash ISAs in a bid to maximise tax-free cash savings while they can.
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Should the £5,000 cash ISA limit be introduced in future, you will have to put more money into a stocks and shares ISA to shield your savings from the taxman. The annual limit on stocks and shares ISAs is expected to remain at £20,000.
While the UK government appears to be in turmoil with a series of U-turns on policies, it now seems as though Reeves could be crumbling. Whether she will continue as chancellor remains to be seen, but whatever happens, it's important ISA changes are played out carefully.
Should Rachel Reeves cut the ISA limit?
In recent weeks, there's been tremendous noise from the industry – all pointing in the direction that pushes savers into investing.
If there is a cash ISA allowance cut, then the agenda to push investing to the public really needs to be part of a huge campaign that informs, educates and builds confidence.
People don't invest because they do not understand it – nor do they trust it. The firms that provide stocks and shares ISAs are not common household names; let’s face it, Brits like a bit of familiarity.
If Reeves, or whoever prime minister Keir Starmer decides should be his right-hand person going forward, decides to make a huge push to convert savers into investors, then the noise around it has to be big, otherwise Reeves will have failed at her attempt to boost the economy by getting more investment in the UK markets.
While it’s highly recommended to hold an emergency savings pot which can cover around three months of essentials, cash savers on average hold around £10,000, according to the Financial Conduct Authority (FCA).
Data from RetailBook, which helps investors navigate the complexities of capital markets, suggest someone who invested £10,000 in the UK from 1 September 1986 to 21 December 2024 would now have £2,301,831. But, if they held it in cash for the same period, they would have £617,178.
RetailBook is currently campaigning for more savers to invest and in particular, via UK capital markets with a GetInvested campaign, adding its voice to get savers to recognise what it means to invest.
The FCA’s review for targeted support, dubbed as a once in a generation advice change, could help facilitate the government’s push to investing.
But will this be enough? How much education would it really take to get people to understand that investing isn't a legal form of gambling. The lack of understanding is deep, embedded in our culture.
Reeves has her work cut out. Any cut to the cash ISAs is simply going to be unwelcome and be seen as a way of removing tax benefits for the vulnerable while handing it over to those who have the confidence to enjoy the riches that come from investing.
She should also take into account that investing is a long term game. Not everyone will be in a position to invest. Should sensible savers keeping their money in cash for short-term goals be penalised?
If city bosses want investments to come to them, then get involved and help campaign for a better financial future. Change your game because we are still stuck in an era that gives the message that investing is an elite club. We need cultural change at every level.
Holding back the tears
Reeves was seen holding back the tears in what looked like a very emotional appearance in the commons during Prime Minister’s Questions this week. It was reportedly due to personal reasons.
The once confident chancellor who stood up delivering the Autumn Budget in October, insisting her policies were necessary to plug the £22 billion fiscal hole left by the Conservatives, seemed broken when Starmer didn't appear to give her the reassurance she needed.
It wasn't easy watching. I don’t think it’s easy being Reeves right now.
With stories coming out each day about how her policies are seemingly damaging individuals and businesses, Labour’s U-turns seem to have become common practice and costly.
It’s the backtracking over winter fuel payments and welfare benefits that will have caused Reeves the most humiliation.
I wholly support the push to invest, but I don't believe that those who choose not to should pay a higher price for doing the right thing – saving their money.
But, with backlash and humiliation likely rattling Reeves’ nerves, making any cut or changes to the much-loved cash ISA is going to be one tough decision. Will Reeves make it?
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Kalpana is an award-winning journalist with extensive experience in financial journalism. She is also the author of Invest Now: The Simple Guide to Boosting Your Finances (Heligo) and children's money book Get to Know Money (DK Books).
Her work includes writing for a number of media outlets, from national papers, magazines to books.
She has written for national papers and well-known women’s lifestyle and luxury titles. She was finance editor for Cosmopolitan, Good Housekeeping, Red and Prima.
She started her career at the Financial Times group, covering pensions and investments.
As a money expert, Kalpana is a regular guest on TV and radio – appearances include BBC One’s Morning Live, ITV’s Eat Well, Save Well, Sky News and more. She was also the resident money expert for the BBC Money 101 podcast .
Kalpana writes a monthly money column for Ideal Home and a weekly one for Woman magazine, alongside a monthly 'Ask Kalpana' column for Woman magazine.
Kalpana also often speaks at events. She is passionate about helping people be better with their money; her particular passion is to educate more people about getting started with investing the right way and promoting financial education.
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