Rachel Reeves plans ISA review
Chancellor Rachel Reeves is planning to launch a review of the ISA market in the coming weeks amid City calls to cap the amount that can be held tax-free in cash.
The Treasury will kick-off a consultation to get a feel for views across the City of London on how to reform the ISA regime, according to the Financial Times.
Such a consultation could lead to some of the biggest changes to the ISA market since it was created in 1999.
The Treasury paper could be launched at Reeves’ Mansion House speech to City executives in July, the FT reported, alongside publication of the government’s Financial Services Growth and Competitiveness Strategy.
ISA accounts hold favourable tax status and are exempt from income and capital gains tax.
There has been an annual investment limit of £20,000 for taxpayers since 2021.
The government in March said it was looking at options for ISA reform which “get the balance right between cash and equities to earn better return for savers” and boost the UK’s “culture of retail investment.”
In January, it was reported that City groups had pushed Reeves to cut tax breaks for cash ISAs, the most popular of the four types of available ISA.
Some industry figures believe money in cash ISAs could create better returns for saves by being invested into stocks and shares.
One industry figure told the FT a consultation would lead to “something more concrete in the Budget in the Autumn.
“We do know the Treasury is keen to listen, so they might find a paper helps to formalise those conversations and lighten the load of meetings they’ve been asked to.”
The Treasury said “no decisions have been taken” as yet, but that ministers were “looking at options for reforms to Isas that get the balance right between cash and equities”.