Savers facing ‘long-term threat' to cash Isa limits following spring statement
Concerns that cash Isa allowances are under 'threat' have been expressed, as the Government said it is looking at options for reforms.
There have previously been reports that the idea of lowering the annual cash Isa allowance to £4,000, from £20,000, was being mooted, to encourage more people to put their money into investments.
Several organisations, including building societies, have pushed back against the idea, while others have argued that it could encourage budding investors.
Government spring statement documents said: 'The Government is looking at options for reforms to Individual Savings Accounts that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission.
'Alongside this, the Government is working closely with the Financial Conduct Authority to deliver a system of targeted support to give people the confidence to invest.'
Treasury costings documents released with the spring statement assume the overall Isa limit of £20,000 remains in place up to and including 2029/30.
The Government feels that engaging with stakeholders across the board is an important part of its work to boost financial services growth and competitiveness.
Richard Fearon, chief executive of Leeds Building Society, said: 'We remain concerned about the long-term threat of a reduction in cash Isa allowances.
'Reducing the amount which can be saved would have significant effects on savers, mortgage rates and wider aims to increase the size of the mutual sector.
'We will continue to make the case on behalf of our members for retaining the current rules, whether that comes as a single change or part of wider Isa reforms.'
Jeremy Cox, head of strategy at Coventry Building Society, said the current 'sigh of relief' for savers 'may be short-lived'.
He said: 'We believe that the current Isa allowance offers simplicity and balance, allowing flexible saving and investing. Cutting tax-free limits or adding complexity with the amounts people can shelter from tax for cash or stocks and shares won't stop savers looking for low-risk, accessible cash accounts.
'Such changes will only lead to confusion for savers and higher costs for savings providers and HMRC, whilst making little impact on UK equity investment. One thing is certain – reducing cash Isa allowances will be deeply unpopular with millions of savers.'
Rachel Springall, a finance expert at Moneyfactscompare.co.uk said: 'There will be savers out there who do not want to be forced to place their hard-earned cash in a pot which could be at risk.
'A stocks and shares Isa is suitable for those who intend to invest over the longer-term, as fund performance can fluctuate over shorter-term timescales.
'However, over the longer-term, stocks and shares Isa can outpace cash returns and beat inflation, but there is never a guarantee that funds will perform well.'
Richard Wilson, chief executive of interactive investor, said: 'For some people, having their cash in an Isa is sensible, for others filling their Isa with stocks is the right choice. What is dumb is to load the bases to incentivise the wrong choice.'
Andrew Gall, head of savings and economics at the Building Societies Association (BSA), said: 'We're pleased that the Chancellor (Rachel Reeves) did not make any changes to Isas in today's spring statement, recognising the range of views on cash Isas.
'We hope the Chancellor remains mindful that any reduction in the cash Isa limit will not only reduce choice and income for many savers who are committed to cash savings, but it is also likely to lead to wider unintended consequences, without delivering the desired economic growth.
'Cash deposits are an essential part of the funding which building societies use for mortgage lending, supporting housebuilding and homeownership.
'Substantially reducing the role of cash Isas could have knock-on impacts on the interest rates and availability of these loans if providers had to raise the funds from other sources.'
Jason Hollands, managing director of Bestinvest, an online investment service owned by Evelyn Partners, said: 'Capping cash Isas as a proportion of the current allowance would essentially turn the clock back by a decade, as prior to July 1 2014 the proportion of the Isa allowance that could be held in cash was limited to 50% of the overall allowance.
'While it is undoubtedly true that too many people keep excess savings in cash and could be missing out on the higher long-term returns that can be achieved from investing, anything that reduces choice and flexibility is a step backward. For some people, investing will simply be too risky and so a reduction in cash Isa limits will just end up exposing more of their savings to tax in standard savings accounts – particularly with the personal savings allowance frozen and dwindling in real terms.'
Mr Hollands added: 'The key question is at what level a cap might be set. An annual cash limit of £10,000 for instance would not impact many cash Isa savers but a £4,000 limit, which has been speculated on, would prove a blow.'
Anne Fairweather, head of public policy and government affairs at Hargreaves Lansdown said the Government's approach 'makes sense'.
She said: 'We're fully behind the Government's mission to increase retail investment, and it's good to see that rather than making an arbitrary change to cash Isas, the Government is taking a more measured and holistic approach, exploring the best ways to support saving and investing through Isas.
'Isas are the first port of call for first-time investors, keeping the framework simple and easy to navigate will help build a British retail investment culture.
'It makes sense not to rush this process. Major change is already on the way, because the advice boundary review will introduce targeted support for retail investors, guiding them to get the asset mix that it right for them, in their circumstances.
'A slower pace of change to the Isa suite will enable the Government to assess the impact of these changes before considering what else should be done.'
Chris Cummings, chief executive of the Investment Association, said: 'We welcome today's commitment from Government to boost the culture of retail investment, including looking at options for Isas reforms that will get the balance right between cash and equities to earn better returns for savers.
'Our industry has long called for the Government to create a culture of inclusive investment, which will see more people benefit from investing, and we're pleased that the Government has now heeded this call.'
The average value of the top 25 stocks and shares Isas is around £8.8 million, compared with £650,000 for the top 25 cash Isas, according to figures obtained from HM Revenue and Customs (HMRC) by money app Plum, covering the year 2021/22.
Meanwhile, some pension experts welcomed a lack of announcements affecting retirement funds, saying it would give people room to plan.
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown said the 'quiet' spring statement for pensions is 'something to be grateful for,' giving people 'valuable breathing room for long-term planning'.
Steven Cameron, pensions director at Aegon, said: 'We know further changes are coming in this summer's Pension Schemes Bill which will include new measures to ensure all pensions offer good value for money and plans to consolidate small pension pots individuals may have left behind when changing employers.'
Mr Cameron added: 'Looking ahead, should budgetary pressures worsen, future changes to the state pension cannot be ruled out. There is an ongoing review of the state pension age.'
He added: 'We also can't ignore the state pension 'triple lock', which has proven costly and unpredictable in recent years. While the Government is currently committed to maintaining it, the formula might be adapted.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Los Angeles Times
2 hours ago
- Los Angeles Times
Oil rises as U.S. stock futures, Asian shares slip after American strike on Iran
NEW YORK — The price of oil rose and U.S. stock futures fell as global markets reacted to the American bombing of nuclear targets in Iran. The price of Brent crude oil, the international standard, rose 2.6% to $79 a barrel. U.S. crude rose 2.6% to $75.76 a barrel. U.S. forces attacked three Iranian nuclear sites early Sunday, further increasing the stakes in the war between Israel and Iran. Futures for the S&P 500 and the Dow Jones industrial average slipped 0.4%, while Nasdaq futures fell 0.5%. Treasury yields were little changed. The modest moves indicate markets are taking the latest development in stride. That was evident in early trading in Asia. Tokyo's Nikkei 225 index fell 0.6%. Other major regional markets also logged moderate declines. The conflict, which began with an Israeli attack against Iran on June 13, has sent oil prices yo-yo-ing, which has in turn caused seesaw moves for the U.S. stock market because of rising and ebbing fears that the war could disrupt the global flow of crude. Iran is a major producer of oil and sits on the narrow Strait of Hormuz, through which much of the world's crude passes. 'The situation remains highly fluid, and much hinges on whether Tehran opts for a restrained reaction or a more aggressive course of action,' Kristian Kerr, head of macro strategy at LPL Financial in Charlotte, N.C., said in a commentary. An Iran retaliation that includes closing off the waterway would be technically difficult to pull off, but traders are afraid Iran could severely disrupt transit through it, sending insurance rates soaring and making shippers nervous to move without U.S. Navy escorts. Some analysts think Iran is unlikely to close down the waterway because the country uses it to transport its own crude, mostly to China, and oil is a major revenue source for the government. 'It's a scorched-earth possibility, a Sherman-burning-Atlanta move,' said Tom Kloza, chief market analyst at Turner Mason & Co. 'It's not probable.' Kloza thinks oil futures will ease back down after initial fears blow over. Ed Yardeni, a longtime analyst, agreed, writing in a report that Tehran leaders would probably hold back. 'They aren't crazy,' he wrote in a note to investors Sunday. 'The price of oil should fall and stock markets around the world should climb higher.' Other experts aren't so sure. Andy Lipow, a Houston analyst who has covered oil markets for 45 years, said that countries are not always rational actors and that he wouldn't be surprised if Tehran lashed out for political or emotional reasons. 'If the Strait of Hormuz was completely shut down, oil prices would rise to $120 to $130 a barrel,' said Lipow, predicting that that would translate to about $4.50 a gallon at the pump in the U.S. and hurt consumers in other ways. 'It would mean higher prices for all those goods transported by truck, and it would be more difficult for the Fed to lower interest rates,' he said. In trading early Monday in Asia, Taiwan's Taiex fell 1.5% while the Kospi in South Korea lost 1%. Both Taiwan and South Korea rely heavily on oil imported through the Strait of Hormuz. Australia's S&P/ASX fell 0.7%, and the benchmark in New Zealand lost 0.5%.
New York Post
2 hours ago
- New York Post
Miranda Devine: Trump's ‘spectacular' Iran strike could carve his place in history as most courageous leader since Ronald Reagan
What an impressive sight it was Sunday, when the futuristic B-2 stealth bombers sliced through the powder-blue Missouri sky on their triumphant return to home base in the American heartland after dropping their Massive Ordnance Penetrator bombs on Iran's underground nuclear sites. The strikes were 'a spectacular military success,' President Trump told the world Saturday night, after emerging from the Situation Room. 'Iran's key nuclear enrichment facilities have been completely and totally obliterated. Iran, the bully of the Middle East, must now make peace,' he said. Advertisement While Joint Chiefs Chairman Gen. Dan 'Razing' Caine said Sunday it was 'way too early' to know the full extent of damage at Iran's Fordow uranium-enrichment complex, satellite images show several large holes and a layer of gray-blue ash where all 14 massive 'bunker buster' bombs, each weighing 30,000 pounds, hit their target Saturday night in Operation Midnight Hammer. The strikes were also a spectacular political calculation by the president who ran on no new wars, and managed to keep a poker face all week as he was given advice by all and sundry. 'Unconventional' He made the right decision, and it appears to have been executed flawlessly. A limited strike, in and out. Iran's nuclear capability has been eliminated or at least severely degraded. No regime change. If the nuclear threat from Iran is indeed neutralized, leading to the extension of the Abraham Accords and peace in the Middle East, Trump will have achieved what countless predecessors failed to do. Advertisement If he pulls it off, without embroiling us in a larger war, he will have carved his role in history as the most courageous and consequential leader since Ronald Reagan. The man who rose from the stage in Butler, blood pouring down his face, raised his fist in the air and said, 'Fight, Fight Fight,' is exactly who you want as commander in chief at a time like this, especially as it's not his first rodeo. Photographs released by the White House show a serious-faced Trump inside the Situation Room Saturday night, wearing his trademark suit and red tie, not cosplaying a flyboy as his more casually-attired predecessors liked to do. His only bow to informality was a red MAGA hat with '45-47' on the side, representing his bifurcated presidential terms and the relentless grit it took to come back from the political dead. Advertisement So much for 'TACO Don.' He outfoxed everyone. Treasury Secretary Scott Bessent, just after emerging from the Situation Room last week where he watched the president deal with the complexities of the Iran-Israel war, likened Trump to Winston Churchill. 'He has a strategy and it's not a conventional strategy, but what conventional person has ever done great things?' said Bessent, in an interview for my new podcast Pod Force One. 'Does anybody think that Winston Churchill was conventional? '[Trump is] also so flexible in terms of the way he looks at things,' Bessent said. 'We've just spent basically the past 24 hours in the Situation Room over the Iran-Israel conflict, and I can tell you that the American people should know, and the American troops should know, that Donald Trump is doing an incredible job looking after their interests in what could turn, without someone like him, could turn into a widespread conflict that US soldiers and interests could get sucked into.' New team Advertisement In one fell swoop, Trump also restored the prestige of the US military, which had plummeted under Joe Biden. Most welcome was the upgrade from Gen. Mark 'Thoroughly Modern' Milley of 'white rage' fame, whom Biden had to give a preemptive pardon on his way out the door, presumably for his Trump-deranged outbursts to the Chinese. In Milley's place we now have 'Razing Caine,' once a daring F-16 pilot, and as cool and contained a general as you could find. 'This mission demonstrates the unmatched reach, coordination, and capability of the United States military,' he told reporters in a Sunday news conference alongside Defense Secretary Pete Hegseth, another veteran whose rapport with 'war fighters' has helped revive recruitment to record levels. 'In just a matter of weeks, this went from strategic planning to global execution,' said Caine. 'As the president clearly said last night, no other military in the world could have done this.' Every week, Post columnist Miranda Devine sits down for exclusive and candid conversations with the most influential disruptors in Washington. Subscribe here! What a contrast to the previous administration. Under Biden, our military was humiliated. Preposterous wokery and weak leadership led to a breakdown in discipline embodied in online displays of perverts in uniform dolled up in kinky dog masks and bondage gear. Advertisement Under Biden, incompetence was the order of the day, from the disastrous withdrawal from Afghanistan, leaving behind $7 billion of equipment, to the failure to bring our astronauts home from the International Space Station, to the $230 million Gaza pier debacle which resulted in the death of one young soldier and dozens of troops injured while delivering minimal aid. The morale and reputation of our armed forces was severely depleted, making a mockery of Biden's frequent refrain' God bless our troops.' Under Biden, Obama's benighted Iran deal that Trump axed in his first term was reanimated. Trump 1.0 left Iran on its knees, unable to fund its proxies to attack Israel. Biden, in his wisdom, empowered and enriched Iran, reappointing Robert Malley, Antony Blinken's childhood friend from their prestigious Parisienne école, as Iran envoy. Malley was then suspended without pay pending an FBI investigation into an Iranian influence ring and his 'mishandling' of classified information. Naturally, the Ivy League came to his rescue, giving him gigs at Yale and Princeton. That is Biden's legacy. Advertisement But instead of thanking Trump for saving the world from a nuclear Iran, Democrats are pretending that he did something unconstitutional, and are whining because he didn't inform Democrat leaders in Congress before the top-secret operation. They only have themselves to blame for proving to be so unreliable with secrets in the past. Hello, Schifty Schiff. Dems were fine with Obama bombing Libya, Syria and Pakistan an estimated 13,000 times, killing thousands of people, without asking Congress for permission. Remember then-Secretary of State Hillary Clinton cackling over Libyan leader Moammar Khadafy's gruesome end when he was sodomized and brutalized to death on camera as she watched lasciviously from afar: 'We came, we saw, he died,' she said. Strong stance Advertisement Democrats should sit this one out. Despite their threats to impeach him, Trump has seized the moral authority and no doubt his already buoyant approval ratings will soar. That's the political dividend of strong leadership. What GOP senator could refuse to pass Trump's beloved Big Beautiful Bill now? And as with everything Trump does, the visuals were impeccable. The icing on the cake was his brand new 100-foot flagpole out the front of the White House, with Old Glory waving languidly in the night breeze as the B-2s worked their magic half a world away. Advertisement You're paying for radical Zoh New York, we have a problem. How could a candidate as toxic and radical as Zohran Mamdani be so close to victory in Tuesday's Democratic mayoral primary? An antisemitic socialist who is running to defund the police and raise more taxes for illegal migrants should be a political impossibility, yet he has surged to second place behind Andrew Cuomo in the polls. Attorney Denise Cohen, who writes a substack as 'Rational New Yorker,' has figured out this dangerous man 'could attain the highest office in NYC using public money that most of us didn't approve through a slush fund that we unwittingly paid for.' Mamdani has the highest social media engagement of all mayoral candidates with almost 6 million likes on TikTok, and has created the false appearance of a vibrant grassroots campaign with tens of thousands of small dollar donors, she writes. But he didn't amass a $8.4 million war chest from grassroots donations. Eighty percent of it came from taxpayers thanks to a New York campaign finance law in which the New York City Campaign Finance Board matches small donations by $8 for every $1 raised. If Mamdani wins, you and I probably paid for his campaign.
Yahoo
3 hours ago
- Yahoo
Newsroom Ready: Carney arrives in Brussels for EU-Canada summit
Prime Minister Mark Carney touched down in Europe for back-to-back summits, where he's expected to unveil key commitments on Canada's security and defence. (June 22, 2025)
