Rachel Reeves had been under fire for reportedly planning to either scrap the cash ISA or reduce the £20,000 annual allowance, with a cap of £4,000 being considered. However, the proposals, which were touted as a way to boost the UK’s economy by encouraging more savers to take out stocks and shares, will not be announced in the upcoming Spring Statement.
Treasury officials said the Chancellor was still considering changes, but these would be announced at a later date. These could still include a proposal to limit the amount savers can put into a cash ISA. Harriet Guevara, chief savings officer at Nottingham Building Society welcomed the news.
She said: “The government has heard the concerns of the industry and the public around potential changes to the cash ISA allowance, and that no changes will be announced in the upcoming Spring Statement.”
Guevara said cash ISAs were a vital tool that help people plan for key life moments, from buying a home to securing their retirement, and we believe the allowance should stay as is.
“While we support the Government’s broader efforts to stimulate economic growth and drive investment in UK businesses, we remain steadfast in our view that there’s no guarantee that reducing the cash ISA allowance would actually help – and in fact there’s a real concern that it will simply lead to people saving less.”
She added: “Alongside our industry colleagues, we stand ready to engage with the Government in an open and constructive dialogue around the ISA regime, and to work together to build the strong financial future for the UK that we all want to see.”
Nottingham Building Society carried out a survey earlier this year, which found that 55% of savers opposed any cut to the cash ISA allowance, rising to three in four (76%) of over 55s.
Over three quarters of those who took part in the survey, 78%, said they believed the government should be promoting tax-free allowances such as Cash ISAs rather than discouraging them
Only 38% say they would consider investing more in a stocks and shares ISA if the cash ISA allowance was cut, while one in three cash ISA holders – an estimated 2.5 million people – say they’d simply save less.