Budget changes to ISAs and increased savings tax may have been designed to steer people towards investing, but they carry an unintended consequence: the effects are likely to fall unevenly on women.
Women make over a million more cash ISA subscriptions than men each year, according to HMRC - not because they lack confidence to invest, but because their finances often demand flexibility. Childcare costs, career breaks, part-time work and fluctuating income mean accessible cash is a necessity, not a cautious fallback.
Reducing tax-efficient space for these savings risks widening an existing gap in financial resilience.
But women are not powerless in this shift. With the right tools and tactics, it’s still possible to protect liquidity and preserve returns.
Even so, it’s clear women are disproportionately affected - so here are some practical steps that can help maintain financial resilience under the new rules.
How will the new ISA and savings tax rules affect savers?
Higher tax on interest fundamentally changes the maths of saving. Jeannie Boyle, financial planner at EQ Investors, says: “Increasing the tax on bank interest will make it harder for the value of your cash to keep up with inflation.”
With inflation at 3.2 per cent, a basic-rate taxpayer now needs a gross interest rate of around 4.6 per cent just to maintain the spending power of their savings once they’ve used their ISA allowance and Personal Savings Allowance.
For higher-rate taxpayers, that requirement rises to around 6 per cent.
This means savers can no longer “set-and-forget” - especially after interest rates dropped back to 3.75 per cent.
Boyle says people will need to be “active in looking for the best rates” and reassess how their money is allocated. For some, shifting more towards investment could improve long-term returns, as the chancellor suggested. “For others,” Boyle adds, “this won’t be a sensible option.”
Why women are likely to feel these changes most
Because women typically hold more cash ISAs, any tightening of rules disproportionately reduces the tax-efficient space available to them. “Women are traditionally savers rather than investors, so are more likely to open cash ISAs,” says Boyle.
But that doesn’t reflect their ability. “When women do invest, some studies have shown they get better returns than men,” she adds.
The issue is suitability.
Caring responsibilities, uneven work patterns and income gaps make investment risk - particularly over short timeframes - harder to absorb. Cash remains the most practical choice for the money women know they’ll need soon.
Irregular income shapes the need for accessible cash
Women’s finances are more prone to interruption. Cash is irreplaceable when planning for maternity leave, navigating gaps between freelance payments or covering childcare spikes.
“Women are more likely to need savings to cover disruption to their income,” Boyle says.
“If you are saving to cover your maternity leave, then you need the certainty that bank accounts offer.”
While the government aims to nudge more savers towards investment, “this is not always a suitable option,” she stresses.
Liquidity is often non-negotiable.
Maintain liquidity without sacrificing returns
Staying organised and tax-efficient is key. Boyle suggests making full use of the allowances available and, for couples, considering who holds which accounts. Transferring savings between partners can help maximise tax-free interest and allocate money in the most efficient way.
That means making sure you use a cash ISA which has a good interest rate and suitable terms for your needs.
Premium Bonds remain one of the most accessible tax-free tools. “You can hold up to £50,000 in Premium Bonds without paying any tax on your winnings,” Boyle says. They offer instant access and a prize rate that often rivals easy-access accounts.
However, there is no guarantee of winning anything at all, which means your money could lose value due to inflation over time. Winners of bigger Premium Bonds prizes tend to skew towards those with much larger savings pots in them.
For higher-rate taxpayers, Boyle suggests looking beyond traditional savings. “Some investors paying higher rates of tax might want to consider direct holdings in gilts,” she says. Gilts are tax-efficient because most of the return is classed as a capital gain rather than income, making them an option for savers frustrated by shrinking allowances.
Think forward, don’t scale back
With allowances falling, the instinct may be to scale back saving. Boyle warns this is the biggest pitfall. She says: “The biggest mistake people could make is reducing the amount they save or invest.” Consistency matters more than ever, even if the vehicles you use need to change.
Women are facing a shifting savings landscape, but they also have clear ways to adapt.
Boyle says it is crucial to have a financial plan. Understanding when you’ll need your money - and how much flexibility you require - makes it far easier to choose the right combination of accounts.
Liquidity is essential for many women, and these rule changes don’t alter that. What they change is the environment around it. With a proactive approach, women can continue to save confidently and maintain the resilience that accessible cash has always provided.
When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.
