The devastating cost of Rachel Reeves’s ISA confusion for savers exposed | Personal Finance | Finance

Millions of Brits are at risk of missing out on tax-free ISA savings after saving limit rules were thrown into confusion by Chancellor Rachel Reeves. Exclusive research for the Daily Express has found savers have been left floundering in the dark over what rules are in place after Ms Reeves bungling attempt to overhaul the £20,000 annual threshold. And finance experts say the widespread confusion means hard-pressed savers are in danger of missing out on thousands of pounds in tax free savings.

From April 2027, Ms Reeves is reducing the annual Cash ISA deposit limit for those under 65 from £20,000 to £12,000. While the total £20,000 ISA allowance remains, the change forces savers to use Stocks & Shares ISAs for amounts over £12,000 to encourage investment, though the limit stays at £20,000 for those 65 and over.

The policy aims to push savers to turn into investors, shifting funds from cash into stocks and shares to stimulate UK equity markets. The treasury expects to raise an additional £95million in tax revenue over five years with the move as it means some savers may pay tax on interest if they exceed cash limits.

But now an exclusive survey carried out for the Express by Newcastle Building Society has exposed widespread confusion among the population.

Almost half of UK adults (47%) claimed to understand what the ISA allowance for 2026/27 is, but when quizzed only a third (30%) were able to correctly state the value as remaining at £20,000, with 12.7 million adults (23%) believing the ISA allowance for 2026/27 is dropping to £12,000. With 70% choosing either the wrong answer it means potentially 38.5 million adult savers are at risk of missing out on £8,000 of tax free savings.

Meanwhile less than half (42%) of those surveyed were aware or understand how the ISA rules are set to change from April 2027. The research also found the impact from the confusion with people either just leaving their money where it is or moving it to another, less beneficial, savings account type.

Newcastle Building Society says the findings underline the importance of accessible, face-to-face financial support, and insist they remain determined to maintain and expand their network of branches across the north.

Managing director Jill Armstrong said: “ISAs remain an effective way for people to make the most of their savings, but our research shows there can sometimes be a gap between how confident we feel and how clear we are on the detail, and that’s where savers can unintentionally miss out.

“With ongoing discussion around the impact of future ISA rule changes, alongside the range of different ISA products and allowances available, it’s understandable that some savers may feel uncertain about what applies to them. Even small misunderstandings around allowances or rules can have a meaningful impact to financial circumstances over time, particularly when it comes to maximising tax-free savings.”