3 April 2025

RETAIL INVESTORS OPPOSED TO SCRAPPING OR RESTRICTING ACCESS TO CASH ISAS, RESEARCH SHOWS

  • Just 11% would support moves to change rules on ISAs and only one in five would invest more in the stock market as a result.

Retail investors are overwhelmingly opposed to scrapping or restricting access to cash ISAs and doubtful that changes would boost stock market investing, new research* from Rathbones Group, one of the UK’s leading wealth management firms, shows.

The study found 61% of retail investors do not want to see changes to ISA rules, which would scrap or restrict the annual allowance to cash ISAs. Just 11% questioned were in favour of changes to cash ISA rules, while 27% did not express an opinion.

Currently, adults can contribute up to £20,000 a year tax-free into ISAs and deposit all the money into cash ISAs, avoiding stocks and shares ISAs. Most recent Government data** shows £41.627 billion was deposited in cash ISAs in the 22/23 tax year, while £28.012 billion was invested in stocks and shares ISAs.

Documents from last week’s Spring Statement*** said “The Government is looking at options for reforms to Individual Savings Accounts that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission.”

Some industry experts have called on the Treasury to scrap cash ISAs entirely while others have suggested cutting cash ISA annual contributions to £4,000 a year. Lord John Lee of Trafford****, the first ISA millionaire, who had £1 million invested in ISAs by 2003, has suggested halving the cash ISA allowance to £10,000 and limiting stocks and shares ISA investments to UK-listed companies only.

Rathbones’ research found just under one in five (19%) retail investors would invest more in the stock market as a result of changes to cash ISA rules, with 4% of those saying they would invest substantially more, with a further 15% indicating they would only increase their investments slightly.

Around 17% of those questioned say changes to cash ISA rules would have no impact on their investment in the stock market, while nearly one in 10 (9%) would reduce the amount they invest in the stock market. Nearly a third (32%) do not know what they would do, while 22% say any changes would not apply to them.

Faye Church, Chartered Senior Financial Planner, Rathbones said: “It’s not necessary to cut tax-free saving allowances to boost stock market investment.  Those who are using cash ISAs are generally not choosing cash as an investment but as a stepping stone for something else. Cash ISAs can be used to hold monies that may be needed in the shorter term while also benefitting from tax-efficient interest - we find they are often popular with younger and mid-life clients looking to buy or move house, for instance.

“It’s not a sensible option to invest short-term monies in the stock market due to market volatility; there is no guarantee that your initial capital will retain its value. If cash ISAs are being used as a more long-term solution, investors could see much stronger returns in the stock market compared with cash savings, but many may need support from wealth advisers before making the decision to switch.”

-Ends-

Capital at risk. The value of investments and the income from them can go down as well as up and you may not get what you originally invested. Past performance is not a reliable indicator of future performance. The information contained in this release is based on our current understanding of HMRC tax regulations in the UK. Tax treatment depends on your individual circumstances and may be subject to change in the future. This information should not be taken as financial advice or recommendation. The registered address of Rathbones Group Plc is 30 Gresham Street, London EC2V 7QN.

Notes to Editors
•     * Rathbones commissioned Viewsbank to survey 619 people with pensions, cash ISAs, investment ISAs, shares, investment funds and cash savings between March 14th and March 17th, 2025. The sample represented the demographic profile of the UK
•    ** Commentary for Annual savings statistics: September 2024 - GOV.UK
•    *** Spring Statement 2025 document - GOV.UK
•    *** https://www.ft.com/content/0334ad8e-a45b-4424-88d6-a2ca1bfc02de

For further information, please contact:

Rathbones
press@rathbones.com

Tessa Curtis
Director of Communications & Corporate Affairs
Tessa.curtis@rathbones.com
07833 346238

Frances McNab
Press Office Senior Executive
Frances.McNab@rathbones.com
07585 981 924

Perception A
Phil Anderson        
phil@perceptiona.com
07767 491519