Select committee: Treasury Committee
Recommendation 4
11th Report - Cash Individual Savings Account
Published 25 Oct 2025
Addressed to HM Treasury
Treasury Committee All items in this report Report on parliament.uk ↗
Recommendation (the committee's words)
The Government should not consider the Cash ISA in isolation when attempting to change investment and savings behaviour. Non-ISA bank accounts make up a large proportion of people’s savings. Savers may also benefit from tax-free savings allowances on interest from these accounts. The Cash ISA is among the most popular and well understood savings products in the UK. Reducing the Cash ISA’s tax-free allowance, and the publicity which would have to go alongside such a reduction, is unlikely to increase the level of saving in shares the UK. It may be more sensible to start any rationalisation of tax-free cash savings by examining the case for the tax-free interest allowance. (Recommendation, Paragraph 17) 12
From: Treasury Committee, 11th Report - Cash Individual Savings Account (HC 1422), 25 October 2025
Government response
The government responded to the whole report on 14 January 2026 (deadline 25 December 2025).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government did not adopt the Committee's recommendation against cutting the Cash ISA limit, and set out that the limit will be £12,000 from April 2027 for under-65s, with financial education and investment support measures alongside.
- Savers aged 65 and above are carved out of the lower limit, "in recognition that they may need more flexibility in how they manage their savings as they approach retirement".
- On financial literacy, DfE "plan to reform" the maths and citizenship programmes of study, including making citizenship compulsory in key stages 1 and 2, as part of the Financial Inclusion Strategy.
- On the tax-free interest allowance, the response states that reductions in the Personal Savings Allowance "would bring many people into paying tax on small amounts of savings income" and create "disproportionate additional costs for HMRC".
- The government is working with the FCA to roll out Targeted Support from April 2026, and will allow Long Term Asset Funds to be held in Stocks & Shares ISAs from April 2026. Help to Save will be made permanently available for new savers and expanded from April 2028.