From Yahoo Finance: 2025-05-19 16:07:00

Rachel Reeves has reversed plans to reduce the tax-free Isa savings allowance, keeping the £20,000 annual limit intact. This decision follows opposition from banks and aims to preserve the popular Cash Isas held by 18 million people. The Chancellor is now considering reforms to promote investment in stocks and shares.

However, the proposed changes to Isas faced pushback from banking executives who warned that lowering the allowance could lead to higher tax bills for pensioners. They argued that the public prefers saving cash over investing in riskier shares. Building societies also expressed concerns about potential impacts on their funding and deposit levels.

Despite initial reports of potential changes to cash Isas, the latest decision to maintain the £20,000 limit is welcomed by savers. The popularity of Cash Isas reached a new high last year, with an increase in deposits stashed away. This move provides stability for millions of savers and allows them to continue enjoying tax-free savings benefits.

Read more: Reeves backs down on plans to cut Isa limit