Chancellor Rachel Reeves is not planning to make changes to cash ISAs in the spring statement later this month, but reform cannot be ruled out altogether, reports have suggested.
There has been growing speculation in recent weeks over whether a shake-up to cash ISAs would be announced in the spring statement to encourage a shift from cash to investments, in a bid to boost UK markets and the economy.
According to reports, the Chancellor is still considering changes but plans to hold off until a later date. Changes could include either scrapping the cash ISA or reducing the annual allowance.
However, industry experts have warned that making changes to the cash ISA would have a significant effect on the way people save.
Chris Rudden, head of investment consultants at Moneyfarm, said: “While an argument can be made that people allocate too much of their hard-earned savings in cash, and that they should instead be encouraged to invest with a long-term perspective, allowing individuals to keep a portion of their savings in cash for the short term remains an important element of any investment strategy.
“If the Government wants to take away this precious allowance in order to find a way to boost UK growth, they need to come up with a solid framework for how people can invest their money into growth projects, without taking undue risk and in a way they can understand. Simply pushing people into stocks & shares ISAs would probably lead to more people investing in global equity markets. Even if they bought listed UK equities, the money would only go to other investors, not to the companies themselves. So, half of the solution seems to still be missing.”
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