Over two fifths of savers would be less likely to use a Cash ISA if annual allowance was cut

• New research from Atom bank reveals that half of savers would start adding excess money into another cash savings account rather than a Stocks & Shares ISA if the allowance was cut

• It comes as the Chancellor is expected to reduce annual Cash ISA limits, prompting concerns about the impact on savers

• Market volatility is driving caution, with almost half of savers shifting towards Cash ISAs when turbulence hits

• First-time buyers are eager to see reform to the LISA, echoing findings from the Treasury Select Committee this week

New research from Atom bank has found that more than two fifths (43%) of savers would be less likely to use a Cash ISA if the annual tax-free allowance was reduced¹. The research findings come ahead of an expected announcement from the Chancellor on changes to the Cash ISA allowance at her Mansion House speech later this month.

While the proposed plans are intended to encourage more people to utilise Stocks & Shares ISAs to boost the UK economy, half of savers (49%) say they’d instead move their money into another cash savings account should the lower cap be introduced.

Perhaps worryingly for the Chancellor, almost two fifths (39%) said that if the Cash ISA allowance was reduced, they wouldn’t save any more into a Stocks & Shares ISA, with the leading reasons being not knowing enough about investing (27%) and perceiving Stocks & Shares ISAs as too risky (25%).

It suggests ISA reform and encouraging a culture of investing in the UK may not come as easy as the Chancellor had hoped. The majority of savers feel ISA reforms wouldn’t change how people invest (61% agree) and would instead make ISAs harder to understand (59% agree). There is also a strong perception that such changes will unfairly impact those who prefer or need to use cash savings (70% agree) or who don’t know how to invest (71% agree).

Nearly two thirds (63%) of people revealed they were unaware of any potential Cash ISA reforms, suggesting any sweeping changes announced this month could come as a surprise to savers across the country.

Confidence in investing fragile

The research also found that recent market volatility has dented savers’ confidence in Stocks & Shares ISAs, with nearly half (46%) of those who don’t have one already saying it’s made them less inclined to open one. One fifth of current holders (20%) are also actively considering withdrawing their money.

With many prepared to add any excess money into another cash savings account if the annual Cash ISA allowance is cut, there is also a risk that savers will miss out on returns. Most Cash ISA users (46%) currently hold one with a high street bank, and if this preference continues when switching to an easy access savings product, many could end up with an average easy-access savings account that offers just 2.72% AER – well below inflation and short of the potential earnings from investments or higher yielding Cash ISA products².

LISA reforms must benefit FTBs

However, the research also points to strong support for reforming the Lifetime ISA (LISA), particularly among first-time buyers - echoing recent findings from the Treasury Select Committee in its report.

The contentious 25% withdrawal charge is an area people want to see changed, with the vast majority (59%) saying it should be reduced or removed altogether. Meanwhile, nearly half (47%) would like the £4,000 annual contribution cap limit to be raised, reflecting the reality of rising house prices and savings expectations.

Chris Storey, Chief Commercial Officer at Atom bank, said: “The ambition to boost investment into the UK is right, but the method matters. Our research shows reducing the annual allowance of Cash ISAs may not necessarily see savers funnelling that money into UK stocks as they instead look to the perceived safety of cash elsewhere. Many savings rates remain lower than inflation so for those who don’t feel investing is right for them, these reforms could leave them worse off.

“Given the impact of recent market volatility and general attitudes to investment in the UK, it’s important that the Government focuses on strategies that educate and restore confidence amongst savers. On the flip side, changes to the Lifetime ISA will likely be welcome and could be a positive step for first-time buyers. With rising house prices and ongoing affordability issues, reforms here are long overdue.

“Ultimately, at a time when many are struggling to save and get on the property ladder, we should be making it easier for people to grow their hard-earned savings.”

ENDS

Note to editors

¹Research conducted on behalf of Atom Bank in June 2025 among a sample of 2,000 UK adults who hold savings

²Moneyfacts, June 2025

For Lansons

Sorcha Hornett, sorchah@lansons.com, 07712 805191

For Atom

Robbie Steel, robbie.steel@atombank.co.uk, 07943 784375

About Atom bank

Atom bank is the UK’s highest rated bank, savings bank and mortgage lender on Trustpilot, and is on a mission to make the experience of borrowing and saving faster, simpler and better value than anyone else.

The bank launched operations in April 2016 as the UK’s first app-based bank, and offers award-winning mortgages and savings through its app, alongside secured business lending for small and medium-sized enterprises.

Based in the North East of England with a team of over 550 people, Atom is here to ​​change banking for the good, for the better, and for everyone. This means focusing on customers’ needs, delivering better value than the incumbents, providing an exceptional app-based experience and offering award-winning customer support via phone, chat, email and social channels. The bank has some of the best customer service credentials in the UK, having achieved 5-star ratings on both the iOS and Android App Stores, and on Trustpilot, whilst consistently delivering Net Promoter Scores (NPS) in the high 80s.

Based in Durham, Atom is an engaged and active member of the North East Community. In 2022 Atom signed a five-year Memorandum of Understanding with Durham University to progress key research and diversity initiatives. The region has one of the highest levels of youth unemployment in the UK and Atom is passionate about addressing the critical digital skills gap and helping develop young people and other groups that are under-represented within the industry. In 2024, Atom purchased 25 acres of newly planted broadleaf woodland in Northumberland to sequester 7000 tonnes of carbon, which will account for all its operational emissions since founding. This forms part of the bank’s pledge to be climate positive by 2035, becoming the first UK bank to make this commitment.

As of November 2021, all employees enjoy a four-day working week, after Atom became the largest company - and only bank - in Britain to introduce the policy for all employees, with no reduction in salary.

The Atom executive team are highly experienced, having built and run some of the most well-respected banks in the UK. CEO Mark Mullen has 30 years’ experience in the sector and was previously CEO at the multi- award-winning telephone and internet bank first direct. The team is supported by a strong non-exec board, chaired by Lee Rochford.