Reeves cutting ISA Limit

[HopelesslyOptimistic]

Please tell me Reeves is not planning on reducing ISA investment limit from 20k to 3k.

Can't be true... she wants people to have more money in their pockets remember? (Unless you are one of those nasty private school parents who deserve to be fleeced with VAT on schools fees; or a min wage worker whose small workplace can no longer afford to pay NI and the increase in minimum wage; or people with share investments who have faced a rise in CGT; or pensions savers with the abolition of IHT relief on pensions; or family farmers; etc etc etc).

Not this again, how many of these scaremongering bot threads do we need?

Being considered according to the scaremongering bot newspapers The Independent and The Guardian.

https://www.independent.co.uk/money/cash-isa-limits-how-much-rachel-reeves-b2701670.html

https://www.theguardian.com/money/2025/feb/20/savings-providers-vow-to-fight-any-attempt-to-cut-cash-isa-limit

The simple reality is that RR made a number of fiscal promises she cannot afford to pay for and there is a Spending Review coming up towards the end of March. Personally I find it very concerning as we are all going to be squeezed hard.

Most people (outside of MN) can’t afford to put anywhere near £20k per year in an ISA.

The articles I’ve read refer to potentially reducing the cash ISA limit, not the ISA limit in general.

I get a better interest rate from savings accounts outwith the ISA wrapper anyway, even allowing for tax, and doubt I’m alone with this.

The original purpose of them was I think to help ordinary people save. Who has £20k a year/£1666 pcm disposable income to save or invest?

I don't have that ability to save anything like that. I have under £2 k in my sole ISA and it's been going for a while now. But I object mightily to the fact that once again various promises that have been made have just gone out the window. (Originally they promised in the October budget was meant to be a freeze on the 20k limit until 2030).

Investment companies have recently been waging a campaign against cash savings, saying billions of pounds sitting in cash ISAs is "wasteful" (despite it being what building societies lend out as mortgages and loans). They want the Government to limit cash ISAs to encourage people switch to investing in the stock market instead.

This is nothing to do with taking away a tax benefit. It is all to do with using the tax system to benefit the economy more by encouraging people to use S&S ISA's rather than cash ones as this leads to more money for businesses to invest and grow.

The argument that S&S ISA's are more risky don't hold water as you can invest in relatively safe low risk/return funds through them.

As always it's a balancing act as some banks need the cash ISA investments in order to make more mortgage funds available.

The argument that S&S ISA's are more risky don't hold water as you can invest in relatively safe low risk/return funds through them.

Investing in S&S is more risky because your capital is at risk. And so many people are clueless about investing (and pensions) but do it anyway - just see some of the posts on the Money board.

You can invest in bonds through an S&S ISA which have much less risk that stocks and shares. You don't have to invest in high risk equities. It just takes a bit of research.

The whole point of the reduction in the cash ISA allowance would be do develop more of an investment culture in the UK.

I clearly missed that it's directed only at cash not S&S ISA's.

The fixed income (bond) market is bigger than the equity market and provides loans to all sorts of governments and companies. There are collective investment funds which invest in a wide variety of bonds to diversify risk and invest in the short term money markets that are very safe and funds that invest in corporate bonds which are less safe but therefore yield more. The best option for those who want more yield than cash but less volatility than equity is to use a strategic bond fund that tactically adjusts throughout the market cycle. Some of them even will sell all and move into low risk money markets when the market looks dodgy e.g. VT AI-funds.

I believe she would love to in fact as with most of this labour governments policies she would realy like nobody to have any savings or rewards for hard work atall. However the reality is the 20k held in all the isas is the money the banks and building societies lend in loans and most importantly mortgages. Some very well respected financial experts predicted that should the isa limit be cut the mortgage market and in turn housing market would quickly collapse. We have to believe that as bad as the labour government is even they aren't that stupid. Although I wouldn't bet on it!