Martin Lewis has warned Chancellor Rachel Reeves not to cut Cash ISA limits today, calling any move to reduce the amount of tax-free cash savings people can deposit each year a ‘big mistake’.
Currently, savers can deposit £20,000 tax-free into ISAs each year, across multiple ISAs in any combination of Cash ISAs and Stocks and Shares ISAs as long as the total amount doesn’t exceed £20,000 across all accounts. But the Money Saving Expert founder has gone on record in the past few weeks to voice his concern over rumours that the government could cut Cash ISAs as low as £4,000.
While the latest speculation appears to be that the savings limit will be kept in place at £20,000 for next year in Ms Reeves’ Mansion House Speech tonight, the government is yet to confirm the limits and even if they are kept in place now, could still cut them in future.
Speaking on ITV’s This Morning on July 2, Martin had called on government not to cut the £20,000 limit on Cash ISAs.
He said: « Personally I think it’s a big mistake. It might be thought of as nudge economics, I think it’s p*** people off economics instead.
“I think most normal savers are gonna go ‘oh, I don’t get the tax-free savings any more I’ll shove it all into investments’.
“It’s like comparing apples with ducks, they’re different things for different people. »
Martin added that “there’s a huge amount of anger” at the idea, suggesting it could be on a similar scale to the fury directed at the Government over their winter fuel cuts that led to a huge U-turn.
He continued: “I’ve personally told Rachel Reeves I think this is a mistake, and I’ve spoken to people at the Treasury, I know many of the building societies out there and some of the big stocks and shares firms are saying, this is not the right way to encourage people to invest.”
But Martin Lewis tweeted on July 11 about reports from the BBC that the Cash ISA limit cut has been cancelled.
Martin called the U-turn ‘a good move’ if true, as he told his followers: “If true, it shows the govt has thankfully listened, to those including me, who have told it the move wasn’t the best way to achieve the stated aim (« to encourage investing not to raise revenue »). A good move.
“Now hopefully it will explore other solutions such as a starter investment ISA to positively encourage people to invest – a carrot not a stick.”
However, even if the changes are not introduced today, the latest speculation is that they have not been ruled out in future, so it’s possible that limits could still be reduced in future years.
Chancellor Rachel Reeves is expected to announce her plans in her Mansion House speech on Tuesday, July 15 at 9pm.
