Chancellor Rachel Reeves made the announcement as part of the Autumn Budget
14:32, 26 Nov 2025
Chancellor Rachel Reeves made the announcement as part of the Autumn Budget(Image: Wiktor Szymanowicz/Future Publis)
The Labour Party government has frozen the repayment and interest rate thresholds for Plan 2 student loan repayments for three years beginning in 2027-28.
Chancellor Rachel Reeves made the announcement as part of the Autumn Budget, which is currently being delivered.
The announcement, which freezes interest rates at 7.9 per cent, instead of falling alongside interest rates and inflation, will raise £400m a year.
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Today’s other major announcements include an extension of the freeze on income tax thresholds.
This extension will last for another three years beyond 2028, with the so-called stealth tax expected to raise £8.3bn a year.
It will mean income tax thresholds do not increase with inflation, meaning more people will fall into higher bands when they receive pay rises.
Alongside this, one of the biggest announcements was the confirmation that Cash ISA’s tax-free allowance has been slashed from £20,000 down to £12,000.
It has been the source of much speculation this past financial year, with many experts correctly predicting its announcement.
On X, Martin wrote: “Cash ISA annual allowance cut to £12,000 (from £20,000) per tax year. This will not apply to over 65s, who will keep £20,000 cash ISA limit.
“The shares ISA will remain at £20,000 Remember this ONLY impacts new money being put in, it won’t impact money already in ISAs.
“There’s logic in here based on the policy aims. While I would’ve preferred a carrot not stick approach – this isn’t as bad as it could’ve been, £12,000 per year is still a reasonable whack for many people.
“The stated aim was not to raise revenue but to encourage young people to invest rather than save – both for the economy but also because on average it outperforms.
“When I met Chancellor on this a few weeks ago, I pointed out that a blanket cut to the limit would be perverse, to cut cash ISA limits to older people to encourage younger to invest wouldn’t work.
“So the carve out for over 65s makes total sense and I’m pleased she listened. What needs to happen along with this is better investment education, easier access to guidance, and better investment incentives for young people.
