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Winston Ruddick, senior financial planner at financial services consultancy Broadstone, argues that protecting the £20,000 Cash ISA allowance is “welcome news for savers”.
Ruddick says reversing the planned cut to £12,000 will help people build tax-free savings without taking on the additional investment risk of putting money into the stock market:
“While encouraging more people to invest is a sensible ambition that could boost long-term returns and channel more capital into UK equities, restricting access to tax-efficient cash savings was always a blunt instrument to achieve this.
“Cash ISAs are a simple, accessible and widely understood savings product, often providing a first step towards building longer-term savings habits and financial security. They play a vital role in financial planning, particularly for those with shorter-term savings goals or a lower appetite for risk.
“The Chancellor has squandered a golden opportunity to help British households build long-term wealth and get more money flowing into the businesses that drive our economy. At a time when Britain desperately needs growth, protecting tax incentives that encourage people to sit on cash rather than invest is a deeply misguided decision.
“Cash ISA subscriptions surged by £26.1 billion last year, more than four times the increase in Stocks & Shares ISAs, yet the Chancellor has chosen to reinforce the very savings culture that is holding Britain back. Worse still, IG modelling suggests phasing out Cash ISAs for new contributions could generate up to £610 million in additional annual tax revenue by 2032-33, without touching existing savings.
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