As speculation mounts over a potential cut to Cash ISA limits, new research from Moneybox highlights their essential role in underpinning the nation’s financial resilience and unlocking future growth prospects when investing.
A nationwide survey of 1,000 Cash ISA savers found that 87% need a significant savings buffer to feel comfortable investing – with an average threshold of £27,617. 8 in 10 see cash savings as the foundation of their financial confidence and almost half (44%) say building up their cash savings is the key to increasing their motivation to invest.
On average, people hold between 1-2 Cash ISAs and while motivations for usage vary by age, one theme dominates, building financial resilience:
- Younger savers (18–34) use Cash ISAs to build financial discipline (46%) and to save for specific financial ambitions such as a house deposit or wedding (42%). Three quarters (75%) contribute weekly or monthly, and this group holds an average of £26,897 in their Cash ISA – actively laying solid foundations for their financial future.
- Mid- to later-life savers (35–64) face greater financial pressures and use their Cash ISA for their emergency fund (41%) and as their primary savings account to make the most of their annual tax-free savings allowance (47%).
- Only 50% of this group contribute weekly or monthly and although they have £29,996 on average in Cash ISA savings, one in five of those aged 45–54 (22%) have £5,000 or less, highlighting the ongoing need to rebuild financial resilience after key life-stage expenses like buying a house, marriage, or having children.
Among those who hold a Cash ISA, nearly half (48%) began their investing journey after opening a Cash ISA, with 65% doing so within two years. This demonstrates the vital role Cash ISAs play in helping people move from saving to investing with confidence.
Looking ahead to the Autumn Budget, an overwhelming 93% of respondents see Cash ISAs as vital for building financial security and resilience and 88% are calling on the Government to protect the Cash ISA tax free savings allowance in the upcoming Budget. 80% of respondents said cutting the allowance would undermine financial confidence, while just 9% said it would prompt them to start investing more.
Cecilia Mourain, Chief Savings Officer at Moneybox, commented :
“Cash ISAs play a critical role in helping people build financial security and the confidence to take their first steps into investing. A strong cash foundation enables households to weather shocks and pursue long-term goals, from homeownership to retirement.
In a period of economic uncertainty, consistency and clarity in savings policy is essential. Millions of people rely on the Cash ISA to build their financial future, and any changes should be carefully considered to ensure they continue to support savers on their journey from building resilience through saving to long-term wealth.”
