Chancellor Rachel Reeves is reportedly planning to cut the annual tax-free limit for cash Individual Savings Accounts (ISAs) from £20,000 to £12,000. This move, expected in her upcoming Budget, is intended to encourage more households to invest their savings in the UK stock market and help address a £22 billion fiscal black hole.
The proposed reduction in the ISA limit has drawn criticism from opposition leaders, who view it as a tax on savers. Sources indicate that the initial plan was to lower the limit to £10,000, but it was raised following internal discussions.
This measure comes as part of a broader set of potential wealth taxes, which may also include a new levy on expensive properties and taxes on gambling and bank profits. British households hold a significant amount of money, approximately £360 billion, in cash ISAs, with many preferring these tax-free accounts over riskier stock market investments.
Recent data shows a decline in money invested in stocks and shares ISAs while cash ISA contributions have more than doubled. Previously, a proposal for a "Brit ISA" requiring a minimum investment in UK equities was reportedly dropped due to backlash from ISA providers.
