Victory for savers as Reeves's feared cash Isa raid postponed
Cash Isa reforms will not happen until at least April 2026, giving savers another year to take advantage of the £20,000 allowance, The Telegraph understands.
Rachel Reeves is reported to be considering a raid on the tax-free savings vehicle. One City firm has urged the Chancellor to slash the annual cash Isa limit to just £4,000.
However, the Treasury has now ruled out reforms in the Spring Statement on March 26. Officials have suggested that changes would not be announced until the Autumn Budget at the earliest, and would not come into effect until April 2026.
Financial experts urged savers to take advantage of the delay. Jason Hollands, of wealth manager Evelyn Partners, said cash Isa savers had been granted a 'stay of execution' for the coming tax year.
He added: 'Given the much tougher tax environment we're in at the moment, an Isa is a no-brainer.
'Isa allowances are 'use it or lose it', so you should certainly be making the most of the £20,000 allowance before midnight on April 5 if you have the resources to do so.
'Isas are also flexible, so you can always withdraw the money later if you need it.'
Ministers have signalled that they are keen on the idea of reducing the tax relief on cash Isas and redistributing the funds in a bid to boost growth.
City firms have lobbied the Government to change Isas to encourage investment in shares over saving in cash. One idea proposed to the Chancellor, by fund management firm Fidelity International, is to create a single Isa for cash and shares with a lower £4,000 limit.
Ms Reeves has said she wants to strike a 'balance' between money put into cash and shares.
There had been speculation that the Chancellor would opt to announce any changes in the Spring Statement, which could have meant new rules coming into effect from the beginning of the new tax year on April 6.
She has previously indicated that major fiscal decisions, such as Isa reform, should wait for a full Autumn Budget.
More than 18 million people have a collective £300bn saved in cash Isas which allow savers to earn tax-free interest on up to £20,000 each tax year.
Wealth managers have warned that cutting tax relief on cash Isas – or scrapping the product altogether – could penalise more cautious savers.
Ian Cook, of wealth management firm Quilter, welcomed the delay to the Isa reforms.
He said: 'It's a temporary reprieve for savers and they should take the chance to wrap any savings they have in a cash Isa.
'And with interest rates as high as they are, it's worth taking advantage.'
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