Brits 'slam hated ISA plan' in new setback for Rachel Reeves

Yahoo

15 hours ago

Chancellor Rachel Reeves was believed to be originally set to announce ISA reforms at her Mansion House speech last week, but following significant pushback, the Labour Party government U-turned on the decision.
Now the focus has shifted to the autumn budget, with finance experts still suggesting the Chancellor is plotting to slash the tax-free limit of a cash ISA from £20,000 to £10,000.
However, new research from the specialists at Nottingham Building Society has suggested that UK savers are against Rachel Reeves' reported plan to change ISAs.
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The current ISA rules allow for savers to deposit £20,000 tax-free, split between cash, stocks and shares, lifetime, and innovative finance accounts.
Of the 2,003 UK respondents to the building society study (who have or have previously had Cash ISAs), 55% of all savers oppose the move.
This rose to 76% of over-55s, while 78% of the respondents believe the government should be encouraging tax-free saving through tools like Cash ISAs, not discouraging it.
One of the reasons behind the potential cash ISA cuts is to push savers into using Stocks and Shares.
However, only 38% of Cash ISA holders would consider switching to a Stocks and Shares ISA if the allowance is cut.
One in three said they'd simply save less, while a fifth (20%) of cash ISA savers said a cut to the allowance would affect their ability to put down a deposit on a home.
This rose to 41% among 25–34-year-olds.
Additionally, 34% fear it would hit their retirement saving and 36% say it would harm their ability to build an emergency fund.
Harriet Guevara, Chief Savings Officer at Nottingham Building Society: 'We're pleased the Chancellor has opened the door to proper consultation on ISA reform. Any changes to a system that millions rely on to build financial security must be based on evidence and real-life saver behaviour.
'The Cash ISA allowance is a mainstream tool used by everyday people to manage their money sensibly.
"More than half of our fixed-rate ISA customers used the full £20,000 allowance last year, and among those saving in-branch, that figure rises to 65 per cent. This shows that for many, the Cash ISA is a lifeline.
'We support the government's aim to boost investing and grow the economy, but limiting savers' choices by cutting the Cash ISA allowance is not the right way to do it."
She added: 'It also has direct consequences for mortgage lending. ISAs held with mutuals like Nottingham Building Society support lending to aspiring homeowners.
"Capping what people can save risks capping what we can lend, and that's directly at odds with the government's goal of doubling the size of the mutual sector.
'This consultation must put the saver at the centre. That means retaining choice, rewarding good savings behaviour and supporting financial resilience for the long-term.'