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Reeves should not cut cash ISA allowance, MPs say
Senior MPs and the Treasury Committee warn cutting the £20,000 cash ISA allowance could harm mortgage lending and fail to shift savers to investments, with 66% of ISA subscriptions in cash.
- Next month, Chancellor Rachel Reeves will decide at the Budget whether to reduce the cash ISA allowance from 20,000 to 10,000, aiming to steer savings into stocks and shares.
- Earlier this year, officials said the government hopes to encourage savers to invest in stocks and shares ISAs and is exploring a better balance between cash and equities to boost tax revenue.
- Data show two-thirds of ISA subscriptions went to cash ISAs in the 2023-24 tax year, with total holdings at £360 billion and 14.4 million people holding only a cash ISA.
- Industry groups warn building societies rely on cash ISA deposits for mortgage lending, so reduced inflows could raise mortgage costs and make markets less competitive, the Treasury Committee said.
- The Treasury Committee recommends prioritising financial education and advice over cutting cash ISA allowances, with Dame Meg Hillier saying `we are a long way` from shifting savers into investments.
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Cutting cash ISA allowance could backfire - and make mortgages more expensive, MPs warn
The latest figures suggest two-thirds of contributions to ISAs in the 2023/24 tax year went to cash accounts - bringing total holdings to £360bn. An estimated 14.4 million consumers solely save in a cash ISA, with the average balance standing at £6,993.
·United Kingdom
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Coverage Details
Total News Sources20
Leaning Left3Leaning Right3Center5Last UpdatedBias Distribution46% Center
Bias Distribution
- 46% of the sources are Center
46% Center
L 27%
C 46%
R 27%
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