Chancellor Rachel Reeves is understood to have delayed plans to reform cash ISAs until after the Spring Budget on March 26.
The Chancellor was thought to be considering reducing the annual tax-free savings allowance from £20,000 to potentially as low as £4,000.
The proposal aimed to encourage savers to direct more money into stocks and shares, boosting the UK stock market and stimulating the economy.
However, Treasury officials confirmed these reforms will not feature in the upcoming fiscal statement.
Reeves remains determined to retain incentives for tax-free cash savings while looking at potential changes to ensure investors have the “right balance between cash and equities”.
Do you have a money story you’d like to share? Get in touch by emailing [email protected].
Rachel Reeves is understood to be delaying reform to ISAs
GETTY
Any major fiscal decisions, including ISA reforms, will wait until the full autumn Budget. Cash ISAs are the most popular tax-free savings product in the UK, with eight million users since their launch in 1999.
The proposed reforms would mark the biggest change to the savings market in over two decades. City Minister Emma Reynolds has already discussed potential reforms with financial services executives.
Speculation had been growing that the Chancellor might announce her decision during the Spring Statement later this month.
Analysts have warned slashing the standalone cash ISA would significantly impact millions of savers who currently enjoy tax-free interest on up to £20,000 annually.
A survey conducted by Find Out Now of over 14,000 Cash ISA holders revealed strong opposition to the proposed reforms.
Those with only a Cash ISA were three times more likely to say they “would not put any money into a Stocks & Shares ISA” (47 per cent).
In comparison, just 15 per cent of respondents believed that “I’d still save the same amount in ISAs overall” even with the changes.
Only one in seven respondents (15 per cent) to the survey indicated they would shift all their savings into a Stocks & Shares ISA.
Find Out Now’s polling also revealed a generational divide in attitudes toward the proposed changes to the popular savings product.
Older Cash ISA holders in their 60s were more than twice as likely to reject moving their savings to stocks and shares compared to those in their 30s.
LATEST DEVELOPMENTS:
Rachel Reeves has came under scrutiny over her policy decisions
PA
Tyron Surmon, the head of Research at Find Out Now, broke down what these findings show about the British public’s thinking.
He explained: “Our poll of 14,000 Cash ISA investors shows them strongly against these proposals.
“They are far more likely to say they’ll just stop saving in ISAs, rather than put money into a Stocks & Shares ISA contrary to what the City and Government might want to hear.”
Chancellor Rachel Reeves will outline any fiscal changes during her Spring Budget statement on March 26, 2025.