The potential Cutting of the cash ISA

[Comingtosunset]

With the potential cutting of cash ISA allowance to £4000, in the up coming spring budget could I please have some advice?

i have £25k in a stocks and shares isa
6k in my cash ISA

Baring in mind the potential change above, would it be wise for me to transfer the contents of my S&S ISA into my Cash ISA before the change comes into play?

I plan to max out my ISA contributions in the coming years- if that’s relevant.

The limit for this year is £20k. I'd be amazed if that were changed retrospectively.

They could change it as soon as 25/26 either reducing it as speculation suggests or moving its focus to encourage investment in equities rather than cash.

If you can have multiple ISA’s, will it matter, won’t it just mean you have more of them to spread the money?

I would imagine that any changes to the rules would only apply to putting new money in - there must be people around with large sums already in both cash and S&S ISAs.

There are always these sorts or rumours flying around before a budget - often either started by those unfriendly to the current budget to engender panic, or leaked by the government themselves to try to gauge public opinion before deciding whether to go ahead with them. I treat them all with a very large pile of salt.

If you have £25k and the government reduces cash isa to £4k in each year - then you can put in £4k which leaves you with £21k interest at 4.5% would not exceed £1000 limit on tax free savings

Sorry I missed the transfer from stock to cash

Oh I’m not sure I was clear in my question.

I know the limit is 20k.

I’m wondering (referring to the possible upcoming change of ISA being £4000 per year) if it’s worth/wise to transfer some of my s&s isa into my cash isa.

As obviously the S&S market is unpredictable. And if the rules do change to £4,000 max deposit per year into the cash ISA, then my money is more exposed in the s&s.

i was planning going forward to put half my monthly savings into s&s and half into cash.

What is the source of this 'potential cutting of the cash ISA allowance'?

In the last budget the Chancellor said it would remain at £20k until 2030.

I wouldn't be making decisions based on Tory bot nonsense.

https://www.theguardian.com/money/2025/mar/01/cash-isas-4000-allowance-tax-free-accounts-limit

guardian nonsense?

https://www.theguardian.com/money/2025/feb/12/nationwide-warns-reeves-against-cutting-tax-breaks-on-cash-isas

It has been in the press for a while - nationwide bots?

I’m hoping nothing will change before April. I want to put an extra £20k into a cash ISA.

No one know’s - have to wait and see. 🤷‍♀️

I think I'd move at least some of it in your position.

Given that part of the reasoning seems to be to encourage saving into S&S ISAs then there isn't likely to be the same restriction on these or the allowance will be two separate pots.

You could max this year's allowance and then start rebuilding your stocks and shares in the next tax year. But if you don't move it now and this goes ahead you'll only be able to add 4k a year to cash iSAs.

It sounds like you'd prefer a cash ISA for peace of mind for at least some of your savings anyway.

Will you have a penalty for moving them now?

I think your plan makes perfect sense. However, you could probably wait until the budget and do it at that point if necessary. You'd have to be quick, of course. Are they both with the same provider - do you have a sense of how long it would take?

The only disadvantage to doing it now is that if it turns out that you didn't need to, you will have paid the fees to sell the shares.

Can we all just wait for actual, genuine information instead of all the ' this may happen...that could happen...' media waffle...

S&S ISAs are unpredictable but mine are up 171% over 12 years. Much much more than interest can give you.

Any cuts to the cash ISA limit have no bearing at all in your position.

You can use an ISA transfer to cash out some or all of your S&S ISA into your cash ISA, or potentially another cash ISA. Don't just cash in - your need to ask your cash ISA provider for specific forms. There's no rush, you can do it whenever you want to.

Stocks and shares do go up and down in value. That is the risk you take in buying them, once you cash them in they won't drop in value but neither will they increase at more than the interest rate. Cashing them in has nothing at all to do with being in an ISA.

You will still be able to use your full ISA allowance, whatever that may be, in future, whether you cash in or not. The two questions are entirely separate.

But please don't follow the "advice" above to just cash it in and then put the money into your cash ISA, follow the transfer process and you will have a cash ISA with £25k in it if you want!

If they do anything at all, it will either be a £10k yearly limit or a lifetime limit of £100k.
Cutting it to £4k and/or taxing interest on existing large ISAs is political suicide, they can’t possibly be that stupid.

I don't think it will happen and I certainly wouldn't do anything dramatic in anticipation of it. At the moment, it is just an idea floated by certain quarters in the finance industry, who put the idea to the Chancellor.

If it does happen, it won't be retrospective (i.e. it won't affect money already saved in a cash ISA) and it will most likely be tapered, say, no change in 2025/26, £10k in 2026/27, £7.5k in 2027/28 and £5k in 2028/29.

I understand what you’re saying, you may want to put more than 4k in cash going forwards, so should you get ahead by filling the cash side now. My answer would be no, unless you have a short term use in mind for the money. because
1). It’s vanishingly unlikely to be changed for 25\26, the providers are all ready to go for that year and putting a cash / shares distinction back in the systems will require at least a few months run-up.

2). It’s not a great time to pull cash out of shares with Trump being particularly silly (although I admit, he might well get worse, so 🤷‍♀️
3). You have very little in your ISA compared to the limits, so it’s not going to make a huge difference to your exposure. If you are going to top out reliably for many years going forwards you’d probably want more of that inequities unless you have a short term use for the cash.

Thank you. You understood and answered my question well. Thank you for your help

Cash interest rates will never keep up with inflation, only stocks can do that for you.

id put what you can in index trackers, dollar cost averaging monthly spends and not bother with cash isa.

govt is keen for us to invest in stock market. That’s the reason for reducing cash isa. Sort of makes sense. If you’re comfortable with investing.

If you are doing a proper ISA transfer it doesn't use up your allowance. So you can do it whenever.