Nationwide has launched a major change to its ISA range as speculation grows Chancellor Rachel Reeves is planning a raid on the popular accounts. The building society launched a wave of new products with increased interest rates in a new announcement.
It came as Chancellor Rachel Reeves is reported to be considering lowering the limit on how much people can put into cash ISAs per year, down to £4,000 from the current £20,000 ceiling. There have also been rumours it could be cut altogether.
Cash ISAs are individual savings accounts through which people can earn interest on savings without being taxed. Ms Reeves has spoken of wishing to foster “a culture in the UK of retail investing like what you have in the United States” in order to achieve better returns for savers.
In the announcement the bank said: “Nationwide Building Society is today (14 March 2025) launching Fixed Rate Online Bonds, Fixed Rate Branch Bonds and Fixed Rate Cash ISAs paying increased rates.”
The new rates are: 1 Year Fixed Rate Online Bond – 4.15% AER; 1 Year Fixed Rate Branch Bond – 4.15% AER; 1 Year Fixed Rate Cash ISA – 4.25% AER/tax-free; 2 Year Fixed Rate Cash ISA – 4.10% AER/tax-free.
It added: “The rates are available for balances of £1 or more and savers can open the Online Bonds via the website, Internet Bank and Banking app while Fixed Rate Branch Bonds can be opened in branch. Nationwide’s Fixed Rate Cash ISAs accept transfers in and can be opened via the Internet Bank, Banking app or in branch.“
Last week research commissioned by the SNP found savers could lose up to £5,132 to tax over a five-year period if the allowance is reduced to £4,000 a year – assuming there is a 5% interest rate and annual deposits of £16,000.
SNP economy spokesman Dave Doogan MP said: “The Labour Party must ditch its damaging plans to impose a punishing new tax on savers, which would clobber more than a million Scots and could cost many households hundreds or thousands of pounds. “This is yet another broken promise from the Labour Government, who said they wouldn’t increase taxes on families but are now dipping their fingers into people’s hard-earned savings.”
Mr Doogan said the UK currently ranks low among European countries in how much household disposable income is saved.
At the end of February, the chief executive of Leeds Building Society said staff have been “inundated” with questions from worried customers over the future of cash ISAs. Richard Fearon said many feel it would be unfair to remove the tax-free allowance.
He said: “Reducing or scrapping cash ISAs will not necessarily create any extra investment in the UK – it’s unlikely to. But what it will do is lead to higher tax bills for savers and higher repayments for mortgage holders, so we think it is a bad idea.”
Ms Reeves said: “It is really important that we support people to save, to achieve their aspirations. At the moment, there is a £20,000 limit on what you can put into either cash or equities, but we want to get that balance right.
“I do want to create more of a culture in the UK of retail investing, like what you have in the United States, to earn better returns to savers and to support the ambition to grow the economy, creating good jobs right across the UK.”
