Over 65s and state pensioners handed Cash ISA boost under Andy Burnham | Personal Finance | Finance
Cash ISA rules will be changed for over 65s, Rachel Reeves announced today (Image: Getty)
A change to Cash ISA rules plotted by now ex-Chancellor Rachel Reeves will be put in place under Andy Burnham and his new Chancellor John Healey.
Cash ISA changes, one of Reeves’ most significant decisions in her tenure at the Exchequer, are expected to proceed as planned from next April.
And for state pensioners and over-65s, there will be an exception in place which gives them a larger Cash ISA limit than everyone else.
Cash ISA limits will be cut to just £12,000, down from their current £20,000, as of April 2027.
But the new rules will not apply to those aged over 65, with special rules to keep the current £20,000 Cash ISA annual deposit limit in place specifically for state pensioners and those aged over 65.
State pension age is 66, rising to 67, which means all state pensioners will be eligible for the new Cash ISA protections, as well as those aged 65 and over who have not yet hit state pension age.
In her Autumn Budget, Reeves announced a long anticipated and much feared cut to Cash ISAs, despite objections from prominent financial campaigners like Martin Lewis.
Under the new rules, savers will still be able to put £20,000 a year into tax-free ISAs like they can now, but Cash ISAs will be limited to just £12,000, instead of the full £20k. Those wanting to use the full £20k allowance will have to put the other £8,000 into a Stocks and Shares ISA instead.
But state pensioners will be allowed to keep the full cash allowance, Ms Reeves said in her speech.
Cash ISAs, which allow savers to put money away and hide it from tax each financial year, have been the subject of scrutiny. At one point, rumours suggested the limit could be set as low as £10,000.
Online hubs will be set up, designed “to help people invest” in the UK, Rachel Reeves said as she set out reforms to the ISA system.
The Chancellor told MPs: “From April 2027, I will reform our Isa system, keeping the full £20,000 allowance while designating £8,000 of it exclusively for investment, with over-65s retaining the full cash allowance.
“And thanks to our changes to financial advice and guidance, banks will be able to guide savers to better choices for their hard-earned money.
“Over 50% of the Isa market – including Hargreaves Lansdown, HSBC, Lloyds, Vanguard and Barclays – have signed up to launch new online hubs to help people invest here in Britain.”
Savers who would usually exceed that amount will need to find alternatives before the change is put in place, such as using Stocks and Shares ISAs, but the change will not affect existing deposits.
