Rachel Reeves issues major update over plans for cash ISA shake-up and new rules - Birmingham Live

Rachel Reeves issues major update over plans for cash ISA shake-up and new rulesChancellor has backed down on plans to reduce the tax-free Isa savings allowance from £20,000 amid mounting

pressure.NewsJames Rodger Content Editor10:19, 20 May 2025Updated 10:20, 20 May 2025Chancellor has backed down on plans to reduce the tax-free Isa savings allowance from £20,000 amid

mounting pressure. Rachel Reeves has issued a major update over plans for a cash ISA shake-up and new rules. The Labour Party Chancellor has backed down on plans to reduce the tax-free Isa

savings allowance from £20,000 amid mounting pressure.

There had been widely-reported plans to slash the £20,000 allowance to as low as £4,000 in an attempt to boost the stock market and kickstart growth.

‌ Speaking to the BBC on Monday, Ms Reeves said: “I’m not going to reduce the limit of what people can put into an Isa, but I do want people to get better returns on their savings, whether

that’s in a pension or in their day-to-day savings.

‌ READ MORE Santander issues update to 14 million 'active' customers after making big decision

“And at the moment, a lot of money is put into cash or bonds when it could be invested in equities, in stock markets, and earn a better return for people.

Article continues below "But I absolutely want to preserve that £20,000 tax-free investment that people can make every year.”

Emma Reynolds, the Economic Secretary to the Treasury, told a Lords committee that the savings product was draining investment from the London Stock Exchange.

“Why have we got hundreds of billions of pounds in cash Isas? We have failed to drive an investment culture,” she said.

Article continues below The Chancellor said on Monday: “One of the reasons why we’re looking at advice and guidance that financial firms can give to their customers is to make sure that

people are making informed decisions about how to invest their money, whether that’s their pension savings or their ISA savings.”

Stuart Haire, the chief executive of the Skipton Building Society, told The Telegraph: “We agree with the Government that people in the UK should increase, if they have the wherewithal and

the risk appetite, the amount of money they have got in equities.

“However, changing the cash Isa limit will not do that, so therefore it’s the wrong tool to achieve the policy outcome.”