Fri, 11 Jul 2025

Fri, 11 Jul 2025 Plans for cash Isa changes on hold after backlash

There had been reports in recent weeks that the chancellor was going to cut the £20,000 limit.
No immediate changes are expected to cash Individual Savings Accounts (Isas) despite concerns over their tax-free benefits, according to Treasury officials. The plan to reduce the Isa allowance was met with opposition from banks, building societies, and consumer campaigners. The £20,000 annual limit for Isas can be used for savings or investments, making returns tax-free. However, some experts argue that reducing the attractiveness of cash Isas may not encourage people to invest in stocks and shares. Treasury officials have decided to put any changes on hold after receiving "differing views" from the sector. Investment companies backed a reduction in the Isa allowance, but banks and building societies who dominate the cash Isa market opposed it. The proposal aimed to boost investment in stocks and shares to drive economic growth. However, critics argued that reducing the Isa allowance would deter people from saving altogether or make them pay more tax on non-Isa accounts. Industry experts say encouraging investment should be done by educating people about the benefits of stocks and shares and simplifying investments, rather than making cash Isas less attractive. The government's decision to pause any changes is seen as a relief for those who value the security of cash Isas. However, it remains unclear if changes will be made in the future to encourage investment. Some proposals may still be outlined in the chancellor's Mansion House speech on Tuesday, which could include education programs and looser rules on regulated advice.
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