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Monzo issues 'get ahead' message to customers over 8,000 savings change

A new Government policy is coming in affecting millions of savers

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Monzo has issued an update about a service available to customers(Image: Getty)

Digital bank Monzo is urging savers to take action to boost their long-term wealth. The group has urged customers to make the most of their allowances ahead of key Government changes.

Jo Phillips, general manager for wealth at Monzo, has urged account holders to "get ahead" of the reduction. A major shake-up of the ISA rules is coming in soon, with an effective cut in the allowance for many savers. Under current rules, savers can deposit up to 20,000 each tax year into their tax-free ISAs, splitting the allowance freely between cash ISAs and stocks and shares ISAs.

However, under the upcoming changes from April 2027, savers aged under 65 will see their allowance available for any deposits capped at 12,000. The remaining 8,000 will be restricted exclusively to deposits into investment-based accounts.

'Make full use'

"My advice to savers is to keep making full use of your annual ISA allowance where you comfortably can - it remains a vital way to earn tax-free interest on your hard-earned savings", Phillips said. "If you're under 65, you can still make the most of the full 20,000 limit this tax year. But it's worth getting ahead of next April's changes today."

The reduction in the cash ISA limit is designed to nudge more Britons into investing, as stocks and shares typically outperform traditional cash interest over the long term. Ms Phillips recommended that account holders begin adjusting their strategy early.

"Start researching your options for any savings above the proposed 12,000 cash limit, or even start investing small amounts now to build that habit for the future", she said. However, Monzo warned that if ministers want to successfully shift public habits toward investing, the wider system needs to become "simpler and more accessible".

Millions of savers are missing out

The wealth expert said: "Millions leave money sitting in cash simply because they lack the confidence or support to invest. That's why at Monzo, we've really focused on lowering the barriers to investing."

The bank is trying to make it as easy as possible to start investing. Ms Phillips said: "Customers can start investing with as little as 1 and with our automated features, they can top-up their investments little and often.

"We're proud that a third of our customers were first-time investors when we launched Monzo investments and over half of our customers now invest every 30 days." The account provider offers a range of options for customers to starting building their investment portfolio.

Customers can open a stocks and shares ISA with them or a general investment account. You need to have a current account with Monzo to access these investment accounts.

Ms Phillips said that further changes from the Government must keep pace with modern technology. She said: "Ultimately, the priority should be creating a policy framework that enables firms to use technology, personalised support, and real time financial information to help more people take charge of their long-term finances."

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