Chancellor John Healey confirmed that he will drop planned cuts to the Cash ISA tax-free allowance in today's Autumn Budget.
The change sees the reversal of former Chancellor Rachel Reeves's plans to cut the Cash ISA allowance from £20,000 to £12,000 for savers under 65 from April.
The aim of the move had been to encourage savers to invest more in the stock market, but it was widely criticised.
Mr Healey said that the tax-free amount that people can put into a cash ISA will remain at £20,000 annually. In his Budget statement he added that he will also work with the sector on a new "Starter ISA" to help make investment more accessible. Details of the new Starter ISA have yet to be made available.
Adrian Murphy, CEO of Murphy Wealth, said: “Scrapping the planned reduction in cash ISA allowances is a backward step at a time when the UK should be doing everything it can to encourage a stronger culture of long-term investing.
"While cash savings are an essential part of good Financial Planning, they are not always the most effective way of building wealth over time. We've made real progress in helping people understand the benefits of investing, and this move risks slowing that momentum."
Winston Ruddick, senior Financial Planner at consultancy Broadstone, said the protection of the current Cash ISA allowance is welcome news for advisers. He said: “While encouraging more people to invest is a sensible ambition that could boost long-term returns and channel more capital into UK equities, restricting access to tax-efficient cash savings was always a blunt instrument to achieve this.
“Cash ISAs are a simple, accessible and widely understood savings product, often providing a first step towards building longer-term savings habits and financial security. They play a vital role in Financial Planning, particularly for those with shorter-term savings goals or a lower appetite for risk.”
Around £135.7bn was subscribed to adult ISAs in 2024 to 2025 (the latest year for which data is available), an increase of £32.7bn compared to 2023 / 2024 - with Stocks and Shares ISA subscriptions increasing by 20% to £31.3bn.
The upward trend in new accounts is largely attributable to the increase in the number of Stocks & Shares ISAs subscribed to (802,000 new accounts to over 4.89m total). The number of cash accounts subscribed to rose to 10.71m, representing 64% of all accounts.
Despite the increase in Stocks & Shares ISA subscriptions, the majority of the expansion in terms of volumes saved was driven by the rise in Cash ISA subscriptions, which grew by 38% to £95.6bn.