Would Reeves dare to carry out a tax raid on our ISAS?

When Rachel Reeves increased national insurance for employers in last October’s Budget, she also put a dent in annual pay rises.

- JAMES MOORE

Her recent pensions review confirmed she has her eye firmly on the sizeable surplus that’s held in big funds. Now, is she about to come for your ISA?

The speculation – and fear – is that the chancellor, strapped for cash, is planning a raid on money kept in tax-free savings accounts. The sums involved are vast. The government spends around £5bn annually on upfront tax reliefs on ISA savings accounts, which allow people to save up to £20,000 every year, with no tax to be paid on any interest, dividends and/or capital gains accrued. Their purpose is to encourage people to put more of their own money away, not least because those with savings are much less likely to have to call upon the state if they run into trouble.

But, right now, it’s the British economy that needs a helping hand. Ever since former chancellor Gordon Brown first introduced ISAs in 1999, they have become an integral way to save. Almost £750bn is now held in such savings accounts. Taxing those savings in some way would represent a handy means of balancing the shaky books.

The chancellor could dip into the nation’s ISAs by lowering the £20k tax-free savings ceiling. She could introduce a cap to the accruable tax-free total: while there is a limit to how much can be paid into an Individual Savings Account (ISA) each tax year, there is no such restriction to how much that ISA can accumulate over a lifetime. An even more radical suggestion would be to dispense with ISAs altogether – which would cut the Treasury relief and force savers to consider riskier investments.