Changes will impact how much money households can put into the accounts
Rachel Reeves has confirmed new ISA rules.
New rules have been confirmed around cash ISAs, with pensioners to benefit.
Major changes around tax-free ISA accounts will impact how much money savers can put into them.
The limit is being slashed from £20,000 to £12,000 in a blow to savers.
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However, it has been confirmed pensioners will be protected from these changes and the £20,000 limit will remain in place for them.
It means those aged 65 and over will still be able to put up to £20,000 a year into accounts.
The changes announced by Chancellor Rachel Reeves will come into force from April 2027, just over a year’s time.
The aim of slashing the ISA limit is to encourage more households to invest in stocks and shares to boost the economy.
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Money Saving Expert explained: “The Chancellor has confirmed the cash ISA limit will be reduced to £12,000 a year from April 2027.
“The Government hopes the change – the first cut to the cash ISA allowance since 2017 – will encourage more people to invest in stocks and shares instead.”
They added: “Aged 65 or older? There will be no change. The £20,000 cash ISA contribution limit will continue to apply.
“Aged 64 or under? Your cash ISA limit will fall to £12,000.
“This will only apply to new contributions you make from April 2027. It won’t have any impact on savings you’ve already contributed to a cash ISA up until this point.”