The majority of cash ISA savers would switch to regular savings accounts rather than stocks and shares should changes to ISA thresholds be announced in the Budget, according to new research by Paragon Bank.

A study by the bank, based on 1,400 cash ISA savers, revealed significant support for maintaining or increasing the current £20,000 cash ISA annual allowance, with 57% of respondents stating the limit is appropriate, and a further 39% calling for it to be raised. By comparison, just 1% of respondents felt the threshold should be reduced.

Chancellor Rachel Reeves is rumoured to be considering halving the current ISA allowance to £10,000 in her Budget on 26 November, as part of a move to encourage investment in stocks and shares ISAs.

However, Paragon’s study highlighted a strong reluctance to move away from cash ISAs. Two in three respondents (62%) said they would not consider switching to a stocks and shares ISA if the cash ISA limit were reduced.

Instead, 57% would opt for a regular savings account, potentially exposing themselves to tax on interest earned. Other alternatives included premium bonds (16%), stocks and shares ISAs (18%), spending the money (16%), or gifting it to friends or family (13%).

“Our research indicates that savers like the security provided by cash ISAs, as these accounts align with their financial objectives and offer stability for those saving towards specific goals,” Paragon’s head of savings, Andrew Wright, said.

“The vast majority of cash ISA savers are reluctant to expose their money to the risks associated with equities, despite the potential tax implications. Ultimately, it demonstrates that if the cash ISA threshold is reduced in the upcoming Budget, we’re likely to see an increase in savers paying more tax on their savings interest.”

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