Cash ISA changes add complexity to the market, says building society
The government’s decision to cut the cash ISA tax-free ceiling has added “complexity” to the market, a building society executive has said, as Britons still seek to have a cash safety net.
Speaking in an interview with CityAM, Stuart Haire, chief executive of Skipton Group has said that while the government was correct to encourage more Brits to invest, slashing the cash ISA ceiling to £12,000 from April 2027 was not the best way to do so.
The government has doubled down on getting more Brits to enter the stock market, boosting retail investing and revitalising the economy.
However, the cash ISA remains the UK’s most popular savings product, with a record £37bn deposited in accounts in 2025, according to the Bank of England.
Haire said: “We think the accommodation that has been reached, it has added complexity to the cash ISA market, but it could have been a lot worse.
“We do agree the government’s ambition to get people investing is a good one. However, there are better ways to do that than making a product that works more complicated.”
The argument for and against cash
Haire noted that people still want cash savings for certain goals, including saving for a housing deposit.
Skipton’s savings book exceeded £30bn for the first time, according to its latest annual results, a 7.8 per cent increase from 2024, returning £195.7m to members.
Haire added: “There’s an awful lot argued that cash is bad all of a sudden, it isn’t, quite a lot of people need access to their money quite quickly. Cash is a really important part of society alongside investment.”
His comments follow an ongoing dispute between brokers and building societies about the cash ISA decision, with brokers arguing the Chancellor should have gone further and scrapped the product altogether.
The Building Society Association reported that building societies hold roughly 46 per cent of cash ISA balances, totalling £205bn as of late 2025.
Providers also argue the product is used to fund mortgages and reducing inflows would potentially make home loans more expensive, which brokers refuted hailing it “scaremongering”.
The Treasury argued the cut would encourage savers to invest in stocks and shares ISAs and ultimately build long term wealth.
Mortgage rates and the Lifetime ISA
The state of the UK housing market in 2025 had been deemed challenging, with Skipton arguing it was “stop-start” as buyers were consistently dealing with speculation surrounding changes to tax and regulation as well as rising prices in certain regions.
However, its mortgage book surpassed £33bn last year, while its estate agent arm Connells, recorded £73.1m in pre-tax profit up from £61.3m.
The estate agent also generated £33.3bn in lending for UK mortgage providers, while the group also reported 50 per cent of new mortgage lending went to people buying their first home.
Many industry figures have noted that the housing market has started to improve this year, off the back of lower interest rates which has restored buyer confidence.
According to Haire, the drop in interest rates, which are predicted to drop again in the spring after UK inflation fell to three per cent in February, is in particular “supportive” for both mortgage growth and housing transactions.
But, he noted that the government must provide consistency for the market, and that while regulatory changes have been promising, “more can be done” to make the house buying smoother for providers, lenders and buyers.
Haire said the need to look into reforms for the Lifetime ISA, as while national prices are staying broadly “flat”, the products fail to properly support the London market.
Pre-tax profit dips
While the account is beneficial for buyers in other regions, the £450,000 tax-free cap puts Londoners at a disadvantage as the average property price exceeds the limit.
Despite the jump in its savings and mortgage book, group pre-tax profit fell to £275.2m from £318.6m the prior year.
The group cited restructuring and investing in its international business, offsetting growth in its building society and estate agent arms.
It also continued investment in its “exclusive savings products” and member benefits.