Cash ISA U-turn in Chancellor’s Mansion House speech
On the evening of 15th July 2025, the Chancellor Rachel Reeves delivered her widely anticipated Mansion House speech. Speculation had been rife about potential changes to the annual tax-free allowance for Cash ISAs in the lead up to the speech, but what was changed? Keep reading to find out what was announced, and if there have been any changes to Cash ISAs.
Tax treatment depends on individual circumstances and may be subject to change in the future.
Key takeaways
- The Cash ISA £20,000 tax-free limit remains unchanged for now, but reforms are still being considered. We could see updates in the Autumn Statement.
- The Chancellor announced a flurry of changes to foster a better investment culture in the UK, including watering down regulation, simplifying investment options and the risk warnings attached to encourage more to start investing.
- Tens of thousands of additional first-time buyers could get on the ladder thanks to changes to mortgage lending
What is the Mansion House speech?
The Mansion House speech is a speech historically delivered by the Chancellor of the Exchequer to the City of London - Mansion House is the official residence of the Lord Mayor of London, and is located in the heart of the City. In practice, the speech is used by the Chancellor to announce financial regulatory changes which might affect us - either directly or indirectly. For example, making it easier for lenders to offer high loan amounts on mortgages.
Is the government going to change the ISAs?
After months of speculation, the Chancellor Rachel Reeves did not reveal that the current Cash ISA limit of £20,000 per year will change in her second Mansion House speech. The Chancellor was thought to be considering reducing the tax-free Cash ISA allowance to encourage people to put money into stocks and shares instead and boost the economy. But this idea seems to have been scrapped off the back of strong opposition from banks, building societies, and consumer advocates, who argued that such a move could discourage saving.
However, the Chancellor did make it clear she is keen to shift some of the £300bn in Cash ISA accounts to accounts which allow people to invest in the UK. And while Cash ISAs seem to be staying the same for now, Reeves did say she is still considering making changes to ISAs in the future to create “better outcomes for both UK savers and for the UK economy”.
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So… what was announced instead?
The main takeaway from the Mansion House speech was that Reeves wants to make the UK a global hub for financial innovation. She claimed that current regulatory rules and red tape are acting as a ‘boot on the neck’ of business, “choking off” innovation in the UK. This follows on from Reeves introducing her financial services strategy earlier in the day during a summit with banking bosses and the heads of City regulators. Dubbed the “Leeds Reforms”, these changes are designed to enhance the competitiveness of the UK’s financial sector.
The main focus is reducing the red tape and potential reforms to regulation to help foster a better investment culture in the UK, while protecting savers' interests. This includes watering down regulations put in place following the 2008 financial crisis, to encourage less “excessive caution” by both businesses and consumers. The Chancellor claimed that these changes will have a ripple effect across the whole economy, “putting pounds in the pockets of working people”.
Another big change is to mortgage loans. After the 2008 crash, lenders tightened lending standards and withdrew high Loan-to-Value (LTV) mortgage deals. Following the Mansion House speech, lenders will be allowed to offer mortgages that are worth more than 4.5x borrowers’ incomes, potentially helping tens of thousands of additional first-time buyers get on the ladder. This comes alongside a permanent, government-backed Mortgage Guarantee scheme, in which taxpayers will pick up the bill when a borrower defaults, in an effort to encourage select banks to offer more low-deposit mortgages.
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The Chancellor also said the government will prioritise initiatives to educate consumers about investment opportunities. This includes simplifying investment options and the risk warnings attached to ensure people aren’t unnecessarily put off from investing. This push to encourage investment aligns with the government's broader goal of boosting economic growth, which has been sluggish in recent months.
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