Chancellor Rachel Reeves plans to cut the tax-free allowance for cash ISAs, redirecting household savings toward UK equities. The total ISA limit will remain unchanged, but the new move aims to shift the current £300 billion in cash ISA holdings. Advocates say cash ISAs offer limited returns, while opponents, including major investment firms, express concerns that this change could negatively impact savers. Research shows only 25% of savers would likely invest in UK equities if cash ISA limits were reduced.
The proposed change to reduce the tax-free cash savings limit under ISAs aims to steer £300 billion in cash holdings toward long-term investment in UK equities.
Advocates of the reform suggest that cash ISAs offer limited returns compared to stocks and shares ISAs, encouraging savers towards higher-yield investments.
Opponents argue the cut could negatively affect savers and fail to increase investment in UK equities, as only 25% of savers would redirect funds into stocks.
Chancellor Rachel Reeves plans to announce the controversial reduction in the cash ISA limit in her Mansion House speech to unlock fresh capital for businesses.
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