Chancellor Rachel Reeves announced changes at the Budget
Millions of people have been given an alert ahead of changes to a tax-free allowance. Just 10.4 per cent of those holding a cash ISA also possess a stocks and shares ISA, according to fresh research from Lubbock Fine Wealth Management, part of chartered accountants and business advisors Lubbock Fine, based on HMRC data published in its Annual Savings Statistics 2025.
The experts noted that this revealed that of the 7.1 million people who hold a cash ISA, only 739,000 also maintain a shares ISA. Andrew Tricker, director at Lubbock Fine Wealth Management, stated the figures indicated cash ISA investors were extremely risk-averse and might favour the ‘security’ of cash ISAs, rather than putting more money into shares ISAs.
From April 2027, the tax-free annual allowance for cash ISAs will drop from £20,000 to £12,000, while the allowance for shares ISAs will stay at £20,000. It will be possible to divide the overall £20,000 allowance, for instance, £12,000 in a cash ISA and £8,000 in a shares ISA.
The reforms, unveiled by Chancellor Rachel Reeves at the Budget in November, are designed to incentivise savers to invest more in shares ISAs. The limited take-up of shares ISAs prompts questions about whether recent Government policies aimed at steering savers towards investing will deliver meaningful change, Andrew said.
He added: “The Government significantly reduced the tax-free allowance for cash ISAs to push savers into investing, but it remains to be seen whether this will be effective.”
The proportion of ISA investments flowing into stocks and shares ISAs dropped to 30 per cent of all ISA investments last year, down from 39 per cent the year before, according to HMRC’s 2025 report. Meanwhile, the share going into Cash ISAs rose to 67 per cent, up from 58 per cent.
Overall, of the £103 billion invested in ISAs, £69.5 billion was put into cash ISAs while only £31 billion went into stocks and shares ISAs in the past year. Since the Government announced cuts to the tax-free allowance for cash ISAs, just two per cent of cash ISA holders have opened a shares ISA, according to Lubbock’s analysis via Opinium Research.
Görkem Barron, Chartered Financial Planner at Lubbock Fine Wealth Management, argued the Government should do more to bridge the financial ‘advice gap’ affecting those who don’t typically invest.
She said: “Many people do not invest and prefer to keep cash simply because they don’t know what alternatives they have. Instead, they often overestimate the risks and underestimate the benefits of investing.”
Since April 2026, certain financial institutions, including banks and building societies, have been permitted to offer financial advice to groups of consumers, rather than exclusively to individuals on a personalised basis.
Görkem added: “The new rules on financial advice should help more people access advice, but it’s unclear whether this will really shift people away from holding cash into investing through stocks and shares ISAs.
“There is much more than the government could do on top of that, for example allowing unused Stocks and Shares ISA allowances to be carried forward for one year could help encourage more people to invest.”
