ISA Changes in the Budget: What Women Need to Know

ISAs remain one of the best ways to save and invest tax-free. Here's what the 2025 Budget means for your ISA strategy.

What Stayed the Same

The £20,000 Annual Allowance

You can still save up to £20,000 per tax year across all your ISAs combined:

• Cash ISAs
• Stocks and Shares ISAs
• Innovative Finance ISAs
• Lifetime ISAs (up to £4,000 of the total)

Tax-Free Growth

All interest, dividends, and capital gains within an ISA remain completely tax-free. This is incredibly valuable.

What Changed

The British ISA (Still Coming)

The planned "British ISA" with an additional £5,000 allowance for UK investments is still being developed. Details remain unclear, but it could provide extra tax-free allowance for those willing to invest in UK companies.

Cash ISA Considerations

With interest rates still relatively high, Cash ISAs are attractive again. But remember:

• The Personal Savings Allowance (£1,000 for basic rate, £500 for higher rate) means many don't need a Cash ISA for interest
• If you're a basic rate taxpayer with under £1,000 in interest, you might prefer a regular savings account with a higher rate

How Women Should Use Their ISA Allowance

If You're Building an Emergency Fund

• Cash ISA makes sense if you've exceeded your Personal Savings Allowance
• Otherwise, a high-interest easy access account might pay better

If You're Investing for 5+ Years

• Stocks and Shares ISA for growth
• Don't let it sit in cash within the ISA—invest it
• Consider global index funds for diversification

If You're a First-Time Buyer

The Lifetime ISA offers:

• 25% government bonus on contributions up to £4,000/year
• Maximum bonus of £1,000 per year
• Can be used for first home (up to £450,000) or retirement

But watch the penalties: Withdrawing for other reasons costs 25% penalty.

The Gender Investment Gap

Here's something that concerns me: women are significantly less likely to invest their ISA allowance in stocks and shares.

The numbers:

• Women hold more Cash ISAs than men
• Women's average ISA balance is lower
• Women miss out on potential growth by staying in cash long-term

Over 20 years, the difference between 1.5% (cash) and 7% (investments) on £10,000 invested annually is:

• Cash ISA: £236,000
• Stocks & Shares ISA: £438,000

That's £200,000 difference. This matters.

Your ISA Action Plan

This Month

1. Check how much of your £20,000 allowance you've used
2. If you have uninvested cash sitting in a Stocks and Shares ISA, invest it
3. Review whether Cash ISA rates beat your Personal Savings Allowance

Before April

Use your remaining allowance. Unlike pensions, ISA allowance doesn't carry over—use it or lose it.

Consider Your Mix

A good balance might be:

• Emergency fund in easy access (Cash ISA if you've exceeded PSA)
• Medium-term goals (3-5 years) in a cautious investment
• Long-term goals (10+ years) in growth investments

Not sure how to invest your ISA? Our investing course walks you through everything, from choosing funds to managing risk.