Could this mean the end for your ISA? Not necessarily...

I’ve been a fierce critic of the chancellor, Rachel Reeves - and I make no apology for that.

- JAMES MOORE

But reducing the cash ISA allowance is a policy I can actually get behind - even if it’s proved controversial in other circles. In fact, I’d go one further and say it’s time ISAs were scrapped altogether.

As it stands, Britons can currently save up to £20,000 tax-free via ISAs - either in cash, stocks and shares, or “innovative finance”, which basically involves the account holder becoming a lender. You can mix and match the three options up to the maximum amount in any one year. Cash ISAs have, however, become by far the most popular, despite offering the least.

Why? As Richard Watkins, a certified financial planner at Continuum, explains: “In 2022-23, the total value of adult ISAs amounted to £71.6bn - of which, 63.2 per cent or £45.2bn was held in cash ISAs. Cash ISA subscriptions have increased and stocks and shares ISA investment has decreased, as people are apprehensive about the future.”

That is, of course, the result for just one year. A grand total of £300bn is sitting in these vehicles, earning interest which may not even beat inflation, currently 3.4 per cent. Per MoneySavingExpert, the very best “brand name” cash ISAs (meaning that you'll have probably heard of the provider) pay 4.1 per cent per annum (Skipton and Leeds Building Society, but there is a Tesco offering that gets close).

However, the best rates typically come with strings. You may have to surrender some flexibility or maintain a minimum balance. Interest rates are also subject to change if the Bank of England lowers rates, which it is gradually doing. Fixed-rate accounts are available, but they pay less.