In the Spring Statement documents, the Government said future reforms will aim to “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.”
It follows months of speculation that cash ISAs could see their current allowance of £20,000 cut to just £4,000 or even scrapped altogether.
Michael Summersgill, chief executive of AJ Bell, said: “Despite holding off on reform today, the Government has confirmed change to the status quo is being considered ahead of the Budget later this year, with Labour having already committed to ISA simplification and encouraging greater use of stocks and shares ISAs during the general election campaign.”
“Rather than having a simple-to-understand £20,000 overall limit, people would have a limit within that limit and there would need to be complex restrictions on transfers from stocks and shares ISAs to cash ISAs to prevent people gaming the system.”
An ISA (Individual Savings Account) allows you to put away up to £20,000 each year without paying tax on any gains you make.
You can also open a Junior ISA to save or invest on behalf of your child.
How could it impact you?
Cash ISAs are extremely popular with over 18 million people having one.
Experts have warned that scrapping or limiting cash ISAs would be a blow to retirees.
square SPRING STATEMENT What the Spring Statement means for welfare, inflation and housing
Read More
“While it’s true that too much wealth in low-yielding cash can hinder long-term returns, cash ISAs still play a valuable role in financial planning.”
It could also have an impact on first-time buyers who rely on the product for their house deposit.
“By taking these away without an alternative savings option could result in fewer people being able to save sufficient funds for a deposit.”
What do the experts think?
“While it is undoubtedly true that too many people keep excess savings in cash and could be missing out on the higher long-term returns that can be achieved from investing, anything that reduces choice and flexibility is a step backward.
Anne Fairweather, head of public policy and government affairs at Hargreaves Lansdown, added: “Refining the ISA framework should be aimed at simplifying choices and opening up investment opportunities.
“A review of the products which can be held within an ISA would also allow for the Government to consider how current investment trends can be supported.”
Read More Details
Finally We wish PressBee provided you with enough information of ( Rachel Reeves pledges reform to ISAs – what it means for you )
Also on site :