UK Tax Allowances Frozen; ISA Contribution Limits Cut to £12,000

The personal tax threshold in the UK has remained frozen at £12,570 since 2021, a freeze that critics say is causing 'fiscal drag' for low-paid workers. Separately, Chancellor Rachel Reeves confirmed that the maximum amount that can be saved into a cash ISA annually will be cut from £20,000 to £12,000 starting in April 2027. Treasury minister Rachel Blake responded to calls for new charity ISAs, noting that the government already supports charitable donations through Gift Aid.

The static tax threshold is criticized for increasing the tax burden on rising wages, while the reduction in ISA limits directly impacts the maximum savings capacity available to UK households. Martin Lewis has previously provided commentary on how couples can utilize the Marriage Allowance to transfer tax allowances.