Citywire spoke to three financial planners about their thoughts on the potential changes to the £20,000 limit from the Labour Party government.
Eight million cash ISA savers issued ‘quite frank’ update that’s ‘terrible’
Cash ISA savers have been issued a “terrible” warning from personal finance experts. Citywire spoke to three financial planners about their thoughts on the potential changes to the £20,000 limit from the Labour Party government.
Scott Gallacher, chartered financial planner at Citywire New Model Adviser Top 100 firm Rowley Turton, said: “Trying to force savers to invest by slashing the cash ISA allowance is, quite frankly, a terrible idea.”
“That money is loaned out to smaller businesses by UK banks,’” he said. “They are the backbone of the UK economy. Far from being inert, Cash ISAs support the very system that fuels economic growth across the country.”
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Greg Neall, chartered financial planner at Wake Up Your Wealth, said: “The language of this ISA limit saga has highlighted the slip of our industry into referring to investment as money in the markets, which is incorrect.
“We need to remember that one off investing, as opposed to regular saving, is irrespective of the asset class. This lazy language has led a chancellor to believe that reducing a tax break on one asset class will make people buy another – it won’t, they will just pay tax on their deposits.”
Nottingham Building Society chief savings officer Harriet Guevara said: “While we support the government’s broader efforts to stimulate economic growth and drive investment in UK businesses, we remain steadfast in our view that there’s no guarantee that reducing the Cash Isa allowance would actually help – and in fact there’s a real concern that it will simply lead to people saving less.”
Almost eight million savers use Cash Isas each year. The Investing and Saving Alliance (TISA) chief executive Carol Knight said: “We’re relieved that the chancellor has decided not to announce any immediate changes to the incredibly popular Cash Isa in her push for growth.
“Using a stick, by cutting the tax benefits of Cash Isas, is not the way to boost the investment culture in the UK. There is a huge amount that the chancellor could and should do to provide a boost to the consumer investment culture in the UK.
“Better routes for consumers to access meaningful advice, guidance and education are essential to unlocking personal investment.
“We welcome the chancellor’s announcement that they will be working with the FCA to deliver a system of targeted support, which will help millions more make effective financial decisions and feel confident in investing their cash.”