Chancellor U-turns on capping tax free ISA savings

Chancellor back down to cap tax free ISA savings after being hit with a fierce backlash from building societies.

It was expected that she was going to announce at her Mansion House speech to cut the current £20,000 annual allowance on cash ISAs.

The Treasury confirmed Rachel Reeves plans have been shelved as there has been “differing views” and ministers want more time to speak to the financial sector.

Reeves will talk about encouraging long term investment and investing money into the stock market.

A Treasury spokesperson said: “Our ambition is to ensure that people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy.”

Harriet Guevara, Chief Savings Officer at Nottingham Building Society, said, “If reports that the Chancellor will not announce a cut to the annual Cash ISA allowance in her Mansion House speech next week are true, this is positive news for savers and for lenders.

We’ve consistently made the case, alongside others across the mutual and building society sector, for maintaining the full allowance, and welcome any decision to consult further with industry rather than rush through damaging reform that would disincentivise saving.

Cash ISAs remain a vital tool for millions to build financial resilience over time, particularly in the current economic climate. Our data shows more than half of our fixed ISA customers used the full £20,000 allowance last year, rising to 65% among those who save in-branch, underlining just how important this option is to those trying to get ahead financially.

We look forward to sharing our views as part of any further consultation process, in support of policies that preserve the full Cash ISA allowance, and system built around optionality, simplicity and long-term value for savers.”