Take stock of savings

CHANCELLOR Rachel Reeves is said to be considering a drastic cut to the Cash ISA allowance, slashing it from £20,000 to just £4,000 in what would be a huge blow for savers if the rumour turns out to be true.

- By Harvey Jones

We'll find out when she delivers her Spring Statement on March 26, with any change potentially coming into force from the new tax year on April 6.

City investment managers are pushing Reeves to encourage savers to put more into Stocks and Shares ISAs, saying this will boost investment in the UK economy.

She is under huge pressure to stimulate investment and encourage growth, said Rob Morgan, chief investment analyst at Charles Stanley.

"The UK remains in an economic funk of muted activity, waning confidence and above-target inflation," he said.

Today, savers can stash up to £20,000 a year tax free in a mix of Cash ISAs and Stocks and Shares ISAs, putting as much or as little as they want into each.

Cash ISAs are popular among retirees and risk-averse savers, as their money isn't exposed to stock market risk.

Today, savers are benefiting from high headline savings rates, Morgan said.