Rachel Reeves has scrapped plans to impose a lower limit on how much savers can put in Cash ISAs each year following a backlash against the plans. There had been months of speculation that the Chancellor was going to reduce the current £20,000 tax-free limit on annual deposits into Cash ISAs in a Treasury bid to encourage greater investment into stocks and shares ISAs in a bid to help the UK’s listed companies and boost the economy.
It was also suggested the move could result in better returns for savers as stock market investments typically outperform the guaranteed returns of Cash ISAs in the medium and long-term.
Ms Reeves had said she would keep the overall £20,000 ISA allowance but there was speculation the cash holdings element could be cut to just £4,000.
The idea faced a major backlash from building societies which argued the loss of Cash ISA funds would impact their ability to offer affordable mortgages and loans and financial experts like Martin Lewis, who suggested the plan was a “mistake”.
He said on Good Morning Britain earlier this week: “The reason for doing this we are being told is not to raise tax revenue, it is to try and encourage more young people to invest for their future, which is a good thing they should be doing.
"My problem is this is a form of push economics but actually in reality it's just ‘pee people off economics’, because most people who've got money in savings aren't going to go 'I'm going to have to start paying tax on some of the interest, I'm going to shove it into a risky-based investment’.” Read the full story on https://www.yorkshirepost.co.uk/business
