{"id":228928,"date":"2025-07-01T09:23:18","date_gmt":"2025-07-01T09:23:18","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/228928\/"},"modified":"2025-07-01T09:23:18","modified_gmt":"2025-07-01T09:23:18","slug":"major-blow-for-savers-as-reeves-is-set-to-slash-tax-free-cash-isa-allowance","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/228928\/","title":{"rendered":"Major blow for savers as Reeves is set to slash tax-free cash Isa allowance"},"content":{"rendered":"

By LUCY EVANS, MONEY REPORTER<\/a> and JAMES TAPSFIELD, POLITICAL EDITOR FOR MAILONLNE<\/a> <\/p>\n

Updated: 04:36 EDT, 1 July 2025 <\/p>\n

Savers are set to lose a chunk of their tax-free cash individual savings account allowance as the Treasury prepares to take an axe to the \u00a320,000 limit.<\/p>\n

Chancellor Rachel Reeves<\/a>\u00a0poised to cave into lobbying by City firms in a move that could affect millions of people who use Isas<\/a>.<\/p>\n

Individuals can currently put \u00a320,000 a year into the tax-free vehicles, choosing how to split the limit between cash and stocks and shares<\/p>\n

However, critics insist the volume of cash Isa<\/a> savings is holding the stock market back, arguing that the Treasury’s \u00a37billion a year tax break should be targeted to encourage investment.\u00a0<\/p>\n

Ms Reeves has been scrambling to find ways of boosting growth, in the hope that it can help her balance the government’s books.\u00a0<\/p>\n

The backlash is another headache for Keir Starmer as he faces the biggest Labour revolt of his premiership so far. Dozens of MPs are vowing to oppose curbs to benefits – despite the PM already having slashed the \u00a35billion package of savings in half in a bid to appease left-wingers.\u00a0\u00a0<\/p>\n

Some 12.4 million adults hold cash accounts to shield their nest egg from the taxman.\u00a0<\/p>\n

Trading platform IG has called for the cash wrapper to be ‘scrapped altogether.’<\/p>\n

\"Chancellor <\/p>\n

Chancellor Rachel Reeves is expected to cave into lobbying by City firms in two weeks’ time and announce a cut to the allowance in her Mansion House speech on July 15<\/p>\n

\"\" \"Government <\/p>\n

Government figures underline the scale of the Isa market in the UK\u00a0<\/p>\n

\"Cash <\/p>\n

Cash Isas are the most popular version of the savings vehicle for Brits\u00a0<\/p>\n

\"Individuals <\/p>\n

Individuals can currently put \u00a320,000 a year into tax-free Isas and can choose to split the limit how they like between cash accounts and investments. Picture: Stock image<\/p>\n

In May Ms Reeves confirmed the overall \u00a320,000 limit would remain in place.\u00a0<\/p>\n

But she stopped short of stating the amount that can be kept in cash will also stay at this level. The Treasury repeated this when approached for comment.<\/p>\n

Ms Reeves said: ‘It’s really important that we support people to save, to achieve their aspirations.<\/p>\n

‘I’m not going to reduce the \u00a320,000 Isa<\/a> limit 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.’<\/p>\n

The Government wants to reform the Isa system to encourage more people to plough money into the stock market to bolster the UK’s lacklustre retail investing culture.<\/p>\n

It is hoped the move will spark more investment into London-listed stocks, which will support the Government’s growth agenda.<\/p>\n

Insiders say the Treasury previously discussed cutting the cash Isa<\/a> allowance to as low as \u00a35,000 but it is understood they are still considering the threshold.<\/p>\n

The Building Societies Association warned earlier this year that savers rely on the tax wrappers to achieve their savings goals but also claimed any curtailment could lead to a mortgage shortage and a hike to borrowing costs.<\/p>\n

In response to the Mail’s Hands Off Our Cash Isa campaign, many readers said they shouldn’t be penalised for preferring safe cash savings over risky stock holdings.<\/p>\n

The Exchequer will rake more money into its coffers if savers breach their Personal Savings Allowance rather than investing.<\/p>\n

Five of the best cash Isas<\/a><\/p>\n

\u00a0Products featured are independently selected by This is Money’s specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.<\/p>\n

A cash Isa is an essential account for savers that protects you from tax on your interest.<\/p>\n

This means that your pot can grow without tax dragging it back – something that is especially important for the growing number of 40 per cent taxpayers.<\/p>\n

This is Money’s savings experts scour the market for the real best cash Isa deals – looking for top rates and accounts that come without catches to trip you up.\u00a0<\/p>\n

Below you can find a run down of our top deals and you can check all the best cash Isa rates<\/a> in our savings tables.\u00a0<\/p>\n

CMC Invest* easy-access<\/a> – 5.44% (0.85% bonus for 3 months)<\/p>\n

– Facts: \u00a31 to open, no limit on withdrawals, short bonus<\/p>\n

– Transfers in: Yes<\/p>\n

– Flexible: Yes\u00a0<\/p>\n

Trading 212*<\/a> – easy access – 4.92% with this link<\/a>\u00a0<\/p>\n

– Facts: \u00a31 to open, no limit on withdrawals, 0.73% bonus for 12 months\u00a0<\/p>\n

– Transfers in: Yes (but won’t get bonus rate)<\/p>\n

– Flexible: Yes<\/p>\n

Chip easy access*<\/a> – 5.00% (0.94% bonus rate for 3 months)<\/p>\n

– Facts: \u00a31 to open, limited to three withdrawals a year, short bonus<\/p>\n

– Transfers in: Yes<\/p>\n

– Flexible: No<\/p>\n

Cynergy Bank one-year fix <\/a>– 4.35%<\/p>\n

– Facts: \u00a31,000 to open<\/p>\n

– Transfers in: Yes\u00a0<\/p>\n

– Flexible: No\u00a0<\/p>\n

Cynergy Bank two-year fix<\/a> – 4.25%<\/p>\n

– Facts: \u00a31,000 to open<\/p>\n

– Transfers in: Yes\u00a0<\/p>\n

– Flexible: No\u00a0<\/p>\n

> Read more in our full Five of the best cash Isas guide\u00a0<\/a><\/p>\n

The apparent move by Ms Reeves comes amid a bleak backdrop for the public finances.\u00a0\u00a0<\/p>\n

Fears are mounting that the Chancellor will have to hike taxes again to fill a burgeoning black hole in the government’s spending plans.<\/p>\n

The situation has been worsened by Keir Starmer<\/a>‘s humiliating U-turns on winter fuel and health and disability benefits.<\/p>\n

Those two changes alone could leave the Treasury having to find another \u00a34billion a year by the end of the Parliament, while pressure is ramping up for more spending on defence.\u00a0<\/p>\n

Ms Reeves was handed some much-needed relief yesterday as the economy was confirmed as growing 0.7 per cent in the first quarter.<\/p>\n

\"\" \"\" <\/p>\n

Official figures showed the powerhouse services sector expanding by 0.7 per cent between January and March.<\/p>\n

Production was also up 1.3 per cent over the three months, although construction recorded a mediocre 0.3 per cent improvement. Overall the expansion was the best in a year.<\/p>\n

However, economists have been warning that a slowdown is already happening after the impact of Labour<\/a>‘s huge tax raid on businesses and Donald Trump<\/a>‘s trade war. GDP fell by 0.3 per cent in April.<\/p>\n

SAVE MONEY, MAKE MONEY\"40%Isa offer\"40%Isa offer<\/p>\n

40% off account fees for six months<\/p>\n

\"CheckFix energy bills\"CheckFix energy bills<\/p>\n

Check price cap beating deals with uSwitch<\/p>\n

\"FreeFee-free Isa investing\"FreeFee-free Isa investing<\/p>\n

Free share and ETF dealing, no account fee<\/p>\n

\"Rate5.44% cash Isa\"Rate5.44% cash Isa<\/p>\n

Rate boosted for three months, then 4.59%<\/p>\n

\"\u00a320Get \u00a320 off an MOT\"\u00a320Get \u00a320 off an MOT<\/p>\n

\u00a320 This is Money Motoring Club voucher<\/p>\n

Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence. Terms and conditions apply on all offers.<\/p>\n

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