Chancellor Rachel Reeves is rumored to cut the cash ISA limit, which Martin Lewis believes is a mistake. The current ISA limit allows £20,000 in tax-free savings across various ISA types. The proposed cut would only affect cash ISAs, not investments. Lewis feels this may lead to more tax on savings interest rather than encouraging investment behavior. He supports initiatives that promote investing in the UK economy but believes this approach is misguided. Lewis expresses concern over the influence of large investment firms in decision-making, emphasizing the opinions of smaller financial institutions.
"Reports Rachel Reeves will announce a cut to the cash ISA limit at her 15 July Mansion House speech. If true, I think it's a mistake."
"Currently you can put 20,000 in tax-free ISAs, whether cash (savings) ISAs, shares (investments) ISAs or the smaller types. It's said the reduction would only be for cash ISAs, so people can still invest the same tax free."
"My suspicion is that for many who use cash ISAs, it will just result in many having to pay more tax on their relatively paltry savings interest, not have an epiphany and think 'oooh I'll just fill up the remainder of my ISA allowance with investments instead'"
"I'll be disappointed if the Chancellor chose to listen to the big investment firms in the City, and shut down many building societies and consumer groups who've said it's not a good route."
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