Why are Cash ISAs in the headlines? 

Cash ISAs have been in the news in recent weeks following speculation that the Government is reviewing calls to scale back on tax allowances. The Chancellor has since confirmed that this is under consideration and while there is nothing to suggest that Cash ISA limits are definitely changing, we’re here to help piece together what it could mean, share our take on it, and keep you up to date.

Investment firms have suggested to the Chancellor and Treasury in recent meetings that they should consider restricting the Cash ISA allowance in order to promote more of a culture of investing. While investing could be a good choice for those looking to grow their money and build wealth for the future by maximising long term potential returns, Cash ISAs remain an important tool for anyone looking to build emergency savings and achieve any short-to medium-term financial goals.

What do we think? Our Head of Personal Finance, Brian Byrnes brings you our take

  • Before being elected, this Labour government committed to reviewing and potentially simplifying the ISA landscape, so this speculation comes as no surprise.
  • It’s also clear that the Government and Treasury, via the ongoing Advice Guidance Boundary Review (AGBR), want to encourage more people to realise the benefits of investing where appropriate. Moneybox supports this ambition and are committed to advocating for consumer needs to be kept at the heart of solutions/ policies throughout.
  • We believe that to drive a culture shift towards investing in the UK – the government and the industry needs to consider measures that will boost engagement among consumers earlier in life, help boost financial confidence to alleviate some of the barriers with investing that currently exist.
  • Cash ISAs play a vital role in supporting financial security and providing a stepping stone to investing. As such the Government will think very carefully about making changes to such a widely used and trusted product.
  • Moneybox have regularly engaged with the Government and Treasury on saving and investing policy in recent years. It is likely that if the government were to make significant changes to ISAs they would consult with the industry. We will continue to proactively engage with the Government and advocate for our customers on all aspects of financial policy.

Why Cash ISAs are important

Cash ISAs have been available in the UK for 25 years and used by 18 million people across the UK, with accounts holding around £300 billion in assets. It’s a great way to build up your savings tax-free with an annual £20,000 allowance – shared across any ISA account – and all interest earned is completely tax-free!

In recent times, Cash ISAs have had a higher interest when compared to other savings or current accounts, meaning savers can benefit from simply moving their cash into an ISA and soak up the gains in interest.

 

Source: Government Official Statistics, 04/12/2024