From Yahoo Finance: 2025-05-16 14:20:00

Banks are urging the Chancellor to abandon plans to lower the tax-free Isa savings allowance, which currently allows individuals to save up to £20,000 annually with no tax on interest or capital gains. The proposed changes would impact the 18 million people who have cash Isas, potentially reducing the allowance to as little as £4,000. City executives have lobbied for Isas to remain untouched, arguing that the reforms would lead to higher tax bills for savers and do little to boost growth. Treasury ministers have been meeting with banks and building societies to discuss the potential changes, with concerns raised about the impact on savers and the wider economy. Building societies in particular could be negatively affected by a reduction in the tax-free allowance, as rules require them to fund mortgage lending through customer deposits, 40% of which come from cash Isas. The investment industry stands to benefit from the proposed changes, potentially making up to £270 million in fees. Some stock brokers are advocating for hybrid Isas that allow both cash savings and investments in stocks, while building societies oppose these plans. The Government is expected to launch a review of the Isa market soon, with further meetings planned with large investment managers. Treasury officials have emphasized the importance of cash savings as a financial buffer for unexpected expenses, but decisions on Isa reforms have not been finalized.



Read more at Yahoo Finance: Leave Isas alone, banks tell Reeves