Cash ISAs see record year – will the government scrap them in the Spring Statement?

2024 was a record year for the Cash ISA market, with savers depositing over £49.8bn.

So, it’s ironic that rumours have started circulating that the government is considering limiting or axing them in the upcoming Spring Statement in March.

This article isn’t personal advice. If you’re not sure an action is right for you, ask for advice. Remember, ISA and tax rules can change, and benefits depend on individual circumstances.

Why are Cash ISAs booming in popularity?

Although rates have fallen from their peak, there are a number of accounts offering around 4.5%.

Meanwhile, the OBR estimates that there will be 2.5 million extra higher-rate taxpayers in the new tax year than there would’ve been if tax thresholds had risen with inflation.

It means many more people worrying about tax on savings, which has pushed Cash ISAs up the agenda for millions of savers. As a result, the market has grown at a phenomenal pace.

So, with rumours swirling, plenty of savers will be concerned that the days of the Cash ISA could be numbered.

Will the government scrap Cash ISAs?

To be perfectly clear, the government hasn’t said anything at all that could indicate this – it’s pure speculation and rumour at the moment.

However, the notional theory is that if there was no Cash ISA, more money could be syphoned towards Stocks and Shares ISAs – helping to power British businesses.

While everyone should hold some cash, especially an emergency fund, it’s also important not to hold too much.

A Stocks and Shares ISA makes more sense for money that people are putting aside for the long term of five to 10 years or more.

However, the big barrier to encouraging greater investment isn’t the ISA framework. Axing the Cash ISA wouldn’t necessarily turn savers into investors overnight.

Meanwhile, changes to the products themselves could expose diligent savers to tax.

Even rumours of changes, as we saw with pension tax free-cash in October last year, always risks reducing faith and confidence in the stability of system.

But removing the hassle of worrying about the tax liabilities of saving and investing is a vital way in which the government encourages people to think more long term about their finances.

What does this mean for Cash ISA savers?

Right now, the Cash ISA rumours are just that – rumours.

In the meantime, savers should focus on what’s right for them, ignoring the rumours and getting the best possible rate they can.

There are some decent rates out there at the moment, and if you don’t want to go hunting for them, platforms like the HL Cash ISA can help. They give you access to great rates from multiple banks through one platform.

And right now, you can get a market-leading one-year fixed rate on deposits from £500.

Market leading rates were last checked against Moneyfacts on 14/2/25 at 10:10am.

If you’ve got enough saved and want to invest, you could consider an HL Stocks & Shares ISA this tax year and be entered into our new prize draw. Terms apply