Cash ISA cut will sabotage vital lifeline for millions

AVERS are hoping that Chancellor Rachel Reeves does yet another U-turn in her Mansion House speech on Tuesday, and scraps plans to slash the annual Cash ISA allowance from £20,000 to a meagre £4,000.

- By Harvey Jones

The move was dressed up as a push to encourage more long-term investment in UK shares, but critics claimed it was a tax grab aimed at pensioners and savers, and have been calling on her to relent.

Any cut was expected to come into force from next April, but now there is the chance of a reprieve.

Cash ISAs are one of the most popular and trusted savings products.

More than 18 million people have one, with nearly half on incomes under £20,000. And for millions of older people, cautious savers and first-time buyers they are a great way to build financial security.

Whether it’s an emergency fund, a pot for retirement or for a house deposit, they offer something rare and valuable peace of mind.

An extraordinary coalition of banks, building societies, financial technology platforms and personal finance experts have written to the Chancellor urging her to back down.

Building Societies Association chief Robin Fieth said Cash ISAs are used for many purposes and simply changing ISA limits is unlikely to get people to invest, “but it will hurt people saving for short-term goals”.

Risk

Many can’t afford to risk investing in a Stocks and Shares ISA because markets can plunge at any moment. Cash ISAs don’t. And for millions who need access to money at short notice, that makes all the difference.