"The Treasury has been examining the limit this year, sparking a fierce debate over whether it should scale back tax breaks on the popular savings accounts to encourage a shift from cash into stock market-based investments in particular, British companies. Reeves has talked about striking a balance between the amounts people can put into cash or shares, and wanting to create more of a culture in the UK of retail investing like you have in the US."
"However, cash Isas are a key source of funding for banks and building societies, which use the deposits to fund loans to households and businesses. Nationwide building society has said that cutting tax breaks on the accounts would reduce the availability of mortgages for first-time buyers. Earlier this year it was rumoured that Reeves could cut the limit to as low as 5,000, but on Monday the Financial Times said she would opt to reduce it to 12,000."
The chancellor plans to cut the annual cash ISA subscription limit from £20,000 to £12,000 to encourage a shift from cash into stock market-based investments and boost retail investment in British companies. Cash ISAs provide important deposits for banks and building societies, which use the funds to finance loans and mortgages; industry leaders warn the reduction could reduce mortgage availability for first-time buyers and deter saving and investing. Almost 10 million cash ISAs were opened in 2023-24 with a record £103 billion deposited. Critics say the cut will add complexity around ISA transfers and risk damaging the ISA brand.
Read at www.theguardian.com
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