While Chancellor Rachel Reeves’ Spring Statement avoided direct mention of ISAs, accompanying documents revealed plans for a consultation on the savings vehicle. The government aims to “get the balance right” between cash and equities, encouraging savers to pursue higher returns and bolstering retail investment, thus supporting economic growth.   

Currently, the annual ISA allowance stands at £20,000, allowing savers to allocate funds between cash and stocks and shares ISAs as they choose. This is supplemented by a £9,000 Junior ISA allowance and a £4,000 Lifetime ISA allowance for younger savers. However, the popularity of cash ISAs has prompted concerns about the long-term investment strategy of savers and the health of the UK stock market.   

The government is also working with the Financial Conduct Authority to provide targeted support to encourage investment confidence. Labour’s 2024 election campaign included a commitment to simplify ISA structures, aiming to increase investment in UK equities.   

Kevin Brown, savings specialist at Scottish Friendly, said: “The Chancellor threw up no real rabbits today in her announcements, but there was a rabbit buried in the Treasury Spring Statement documents. It has confirmed it is looking at potential reforms to ISAs and whether the allowance is correctly balanced.

“This is a potentially significant development for the ISA system, which has seen no major tweaks since the introduction of the Lifetime ISA in 2017. The issue at the heart of the review is whether cash is always the best option for savers, especially considering long-term goals.

“Cash certainly has a place in a financial plan, particularly for rainy days and short-term needs. But for longer-term plans investing provides the potential for growth. Getting the balance right of any reforms is key however. We await any potential consultation with interest.”