Cash ISA savers have been given extra time to save (Image: Getty)
Savers have been given extra time to take advantage of the £20,000 cash ISA allowance. It was previously reported that was looking at from £20,000 to £4,000 in a major blow to those aiming to save money.
However, changes in the Spring Statement, set to be announced on March 26, have now been ruled out. Officials have suggested that changes to the ISA allowance would not come into effect until April 2026, in the new financial year. And people have now been urged to take advantage of the delay to ensure they save as much money as possible.
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Jason Hollands, of wealth manager Evelyn Partners, said having an ISA is a “no-brainer” and savers had been given a “stay of execution” for the coming tax year.
As reported by , he said: “Given the much tougher tax environment we’re in at the moment, an Isa is a no-brainer. Isa allowances are ‘use it or lose it’, so you should certainly be making the most of the £20,000 allowance before midnight on April 5 if you have the resources to do so. Isas are also flexible, so you can always withdraw the money later if you need it.”
It is suggested that changes to the cash ISA allowance would be announced in the Autumn Budget at the earliest with changes coming into effect next April. The government is keen to change the system to encourage investment in shares.
They hope to redistribute funds by reducing the tax relief on cash ISAs. It had been previously reported that the Chancellor would announce the changes as soon as the Spring Statement, meaning they would come into effect from April 6.
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Rachel Reeves will lay out her Spring Statement on March 26 (Image: Getty)
Christie Cook, managing director of retail at Hodge Bank, previously warned: “The annual ISA allowance for the 2024/2025 tax year is £20,000. If you haven’t already reached this limit, now is the time to top up your account. Whether it’s through a Cash ISA, Stocks & Shares ISA, or Innovative Finance ISA, ensuring you fully use this allowance could result in significant tax savings.
“Following the previous tip about maximising your savings by using your full ISA allowance if you’ve been holding cash in a non-ISA account, consider transferring it to your ISA to benefit from tax-free interest or capital gains. This will allow you to gain more interest on the money you’ve been storing by reaping the rewards of tax-free interest.
“For those with a longer investment horizon, a Stocks & Shares ISA could provide higher growth potential compared to a traditional Cash ISA. By investing within an ISA, any returns are tax-free, giving you the opportunity to build wealth over time without worrying about capital gains tax.”