With speculation growing that the Chancellor will halve the annual Cash ISA allowance from £20,000 to £10,000 in next month’s Autumn Budget, new research from Nottingham Building Society shows that millions of people are already struggling to save regularly – highlighting the risk that further changes could discourage saving altogether.
The study of more than 2,000 adults reveals that more than two fifths of UK savers (44%) do not save money on a regular basis, rising to 48% among those aged 60 and over. Women are also less likely than men to save consistently, with the research finding that 47% of women admitted to not saving regularly versus 40% of men.
Regionally, the issue is most pronounced in the North East (where 52% of adults say they do not save regularly), Wales (50%) and the South East (47%). In addition, one in three (28%) UK adults admit they save only “when they can”, a figure that rises to 34% for over-60s.
The findings come against a backdrop of ongoing financial pressures felt across UK households. The continued freeze on income tax thresholds – effectively a “stealth tax” through fiscal drag – has already eroded household finances, pulling millions more into higher tax bands.
Rising living costs and stagnant wage growth mean many savers are prioritising short-term financial priorities over long-term returns. The research also found that more than half (57%) of respondents said they were not saving “more than last year”, with the figure climbing to 70% among over-60s.
Reflecting this, 45% of people say they keep their savings in a current account, while another 45% prefer an easy-access account. Almost two thirds (37%) say they feel most comfortable saving in a Cash ISA, rising to almost half (47%) of those aged 60 and over – a reminder, according to Nottingham Building Society, that the product remains a vital tool for those seeking a secure, tax-free home for their money.
By contrast, only 18% hold savings in a Stocks and Shares ISA, underscoring how few are currently comfortable with taking investment risk. This trend is particularly stark among women, where only 13% said they felt most comfortable keeping their money in a Stocks and Shares ISA, versus almost a quarter (24%) of men.
Harriet Guevara, Chief Savings Officer at Nottingham Building Society, said: “We understand the government’s ambition to promote a stronger investing culture in the UK, but cuts to the Cash ISA allowance is the wrong lever to pull. Cash ISAs remain one of the few straightforward, low-risk tools that help people build financial security, particularly during periods of economic uncertainty.
“Our data shows that many people already struggle to save consistently. If the Cash ISA allowance is cut, it risks pushing savers into products they don’t fully understand, or worse, out of saving altogether. Research we did earlier this year found that only 38% of Cash ISA holders say they’d consider switching to a Stocks & Shares ISA if the allowance were halved, while a third say they’d simply save less*.
“For many, the Cash ISA is a cornerstone of their financial planning. Three fifths of our fixed-rate ISA customers used the full £20,000 allowance last year, and among those saving in-branch, that figure rose to 65%.
“We believe that savers deserve choice, not restriction. The ISA system should support a range of financial goals, from first homes to retirement, through optionality, simplicity and flexibility. Cutting allowances sends the wrong signal at a time when households need reassurance and stability, not uncertainty. We urge the Chancellor not to cut the tax-free allowance in November.
“Thinking beyond savers, it’s also important to remember that ISAs held with mutuals like Nottingham Building Society directly support lending to aspiring homeowners. Cutting the Cash ISA limit risks limiting that lending power, in direct contradiction to Labour’s own ambition to double the size of the mutual sector.”
