27 Nov 2025
Reaching half a million pounds in cash ISA savings could take extra 13 years
- Halving the cash ISA allowance to £10,000 would add 13 years onto the time it takes to save £500k in the average cash ISA
- But savers can still reach milestones more quickly by taking out a top-rate cash ISA
Reaching half a million pounds in cash ISA savings could take savers at least an extra 13 years if rumoured Budget allowance cuts take place, according to new research from Investec Save.
Chancellor Rachel Reeves is rumoured to be considering cutting the current yearly total ISA allowance to just £10,000 for cash ISAs. The current limit is £20,000.
Currently, the average cash ISA pays a rate of 2.79% a year*. A saver depositing £20,000 a year into the typical cash ISA would take 19 years to reach the half a million-pound milestone, according to Investec Save analysis, with interest compounded and assuming no withdrawals.
This drops to 17 years for those with a current top 10 cash ISA, paying an average rate of 4.17%.
Particularly for savers who are uncomfortable investing in a stocks and shares ISA, if the Chancellor does halve the cash ISA allowance, reaching these cash savings milestones will take significantly longer. A saver only depositing £10,000 a year into the average cash ISA would instead take 32 years to save £500k – an extra 13 years compared to maxing out the current £20,000 limit.
This falls to 27 years if using Investec’s 1-Year Fixed Rate Cash ISA, currently paying 4.27% AER**.
Table to show how long it would take to reach savings milestones
| Cash ISA savings milestones | Number of years to reach milestone if depositing £20k per year in typical cash ISA | Number of years to reach milestone if depositing £20k per year in current top 10 cash ISA | Number of years to reach milestone if only depositing £10k per year in typical cash ISA | Number of years to reach milestone if only depositing £10k per year in current top 10 cash ISA |
|---|---|---|---|---|
| £250k | 11 years | 10 years | 19 years | 17 years |
| £500k | 19 years | 17 years | 32 years | 27 years |
| £1 million | 32 years | 27 years | 48 years | 40 years |
Investec Save’s 1-Year Fixed Rate Cash ISA can be opened with a minimum of £1,000 and customers earn tax-free interest on deposits fixed for one year.
David Hunt, Head of Deposits, Investec, said: “Halving the annual cash ISA allowance would make it significantly harder for savers to build meaningful long-term wealth. Our analysis shows that saving £500k in a cash ISA could take an extra 13 years under the rumoured changes.
“This highlights just how powerful consistent saving and the effect of compound interest can be over time, but also how sensitive those outcomes are to policy changes. The ISA has been one of the most successful savings vehicles in the UK, encouraging millions to save tax-efficiently for the future. Reducing the annual limit would inevitably slow that progress for ordinary cash ISA savers, particularly those who are disciplined about maximising their yearly contributions.
“At Investec Save, we believe it’s more important than ever for people to make their money work harder. By seeking out competitive rates and making full use of available allowances, savers can continue to grow their wealth, even in a changing environment.”
There are currently around 300 ISA millionaires that used a combination of returns on cash and investment (stocks and shares) ISAs to reach coveted millionaire status, according to figures from HM Revenue & Customs.***
For more information on the 1-Year Fixed Rate Cash ISA and the full product summary box, see our webpage at savings.investec.com/fixed-rate-cash-isa.
Investec Save’s range of accounts can be opened online in minutes and are fully managed online with no hidden fees or charges.
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