Rachel Reeves warned rumoured ISA plan could be damp squib | Politics | News
Rachel Reeves has been warned that the rumored plan to change ISAs is a risk and there is no guarantee it will result in more investment. The cut to the tax-free cash ISA allowance, which is believed to be imminent, will leave savers, including those approaching retirement age, without a safe and secure place to store their earnings. Ben Mitchell, Director of Savings Chetwood BankHe said: “Speculation was rife ahead of the Autumn Budget 2025 and ISAs emerged as a potential focus for reform.
“This could be a risk and the Chancellor should resist the temptation to further fiddle with the ISA rules. Tax-advantaged savings have been subject to constant adjustments ever since they were called PEPs and TESSAs, evolving from simple savings vehicles into something that, despite their popularity, has become unnecessarily complex and confusing.” He added: “Cash ISAs play a clear role – they offer people, particularly those approaching retirement, a safe and tax-efficient way to hold cash.
“Savers can de-risk their portfolios when they need to by providing a simple and secure package, free from volatility and unnecessary taxes.”
Mr Mitchell warned the move could prove ineffective if Ms Reeves decided to proceed.
The expert said: “There is no guarantee that changing the ISA rules will lead to more money going into other investment assets such as stocks and shares.”
He then suggested an alternative.
Mr Mitchell said: “Rather than further tweaks, the priority should be to simplify both the ISA package and the guidance and advice pathway.
“This will benefit both investors and product providers and help people put their hard-earned savings to work as tightly as possible.”
Data shows Britons paid into 9.9 million Cash ISA accounts in 2023/24, according to AJ Bell.
Almost £70bn was paid into them that year.
An ally of Reeves previously told the Financial Times: “He wants to see people investing more in British stocks because it’s good for growth and provides better returns for savers.”
“But we can’t win the argument on our own. Many businesses support the idea but never voice it.”
