Government issues isa update after investments query

SAVERS CAN CURRENTLY DEPOSIT UP TO £20,000 A YEAR INTO ISAS NICHOLAS DAWSON 05:15, 22 May 2025Updated 07:00, 22 May 2025 Labour has made clear its stance on ISAs in response to a question

about the tax-free savings vehicle. Lord John Lee queried the Government in a written question in Parliament on how ISA funds that are channelled into foreign investments contribute to the

UK economy and align with the Government's "growth agenda". An attraction of ISAs is that you pay no tax on any accrued interest or investment gains. You can invest in stocks

and shares within an ISA framework, which can include both UK and international ventures. Presently, individuals can assign up to £20,000 annually across various ISA types. Recent reports

suggest the Government is looking at imposing a £4,000 limit on contributions to cash ISAs, to encourage more investing. However, Labour recently spoke out to confirm it intends to maintain

the current ISA allowance. READ MORE: Nationwide message for all customers as 'you need to do this immediately' Addressing the question, Labour Lord Livermore said: "The

Government is committed to incentivising greater saving and investment, to help people save for their future goals and build greater financial resilience. The Government offers a generous

tax treatment on ISAs to support people of all incomes and at all stages of life to save." Lord Livermore also mentioned a past Government call for evidence which concluded on December

12, exploring how to increase investments in capital markets and to encourage more consumers to try investing. He also said in his response: "The Government is looking at options for

reforms to ISAs that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission. "The

Government keeps all aspects of tax and savings policy under review." Some savings experts are calling for an increase in the ISA allowance. Danny Haynes, chief product officer at Kroo

Bank, said: "We hope the Chancellor will consider an additional £20,000 allowance for stocks and shares ISAs, providing tax relief of up to £40,000 in total annually. This will

encourage the public to grow their wealth tax-free in a way that suits them, and help foster high-yield returns – putting the UK's 'lazy money' to work and fuelling the engine

of economic growth." Another person calling for a doubled ISA allowance is Rezaah Ahmad, CEO of investment platform WiseAlpha. He said: "To meaningfully improve the UK's

savings landscape, Labour should consider raising the annual ISA allowance to £40,000. "This increase would better reflect both inflationary changes and a desire to incentivise greater

investment ISA usage since the current £20,000 limit was introduced in 2017 and the growing need for individuals to take greater control of their long-term financial futures and generate

wealth above inflation. "An allowance of £40,000 would provide far more flexibility, enabling savers to effectively build and diversify their portfolios across cash, stocks, shares,

bonds, and alternative assets without being constrained by outdated thresholds." Labour was recently questioned in Parliament about its plans to reform Lifetime ISAs, which provide a

25% bonus on deposits. The product allows annual contributions of up to £4,000, meaning you can get a maximum bonus of £1,000. Article continues below The funds are intended for first-home

purchases or can be accessed when you turn 60. Treasury minister Emma Reynolds was asked about potential reforms to the policy, but she refused to disclose any specific details. Regarding

the Lifetime ISA's dual purpose, Ms Reynolds said: "You could argue that one of the benefits of the dual purpose is it's very flexible. You may have a situation where somebody

is using it to purchase a home, that doesn't work out, they could actually use it for a pension later in life."