Financial experts have issued a stark warning about potential Labour government plans to reduce the £20,000 Cash ISA limit, labelling such changes as "terrible."
Chartered financial planners have voiced concerns that slashing Cash ISA allowances won't necessarily encourage savers to invest in markets instead.
They argue that Cash ISAs play a vital role in supporting economic growth by providing funds for bank lending to smaller businesses.
Scott Gallacher, chartered financial planner at Rowley Turton, said: "Trying to force savers to invest by slashing the cash ISA allowance is, quite frankly, a terrible idea."
"That money is loaned out to smaller businesses by UK banks," he explained.
"They are the backbone of the UK economy. Far from being inert, Cash ISAs support the very system that fuels economic growth across the country."
Greg Neall, chartered financial planner at Wake Up Your Wealth, criticised the language used in discussions about ISA limits.
"The language of this ISA limit saga has highlighted the slip of our industry into referring to investment as money in the markets, which is incorrect," he said.
He added: "We need to remember that one off investing, as opposed to regular saving, is irrespective of the asset class."
MORE LIKE THIS:
"This lazy language has led a Chancellor to believe that reducing a tax break on one asset class will make people buy another – it won’t, they will just pay tax on their deposits."
Nottingham Building Society chief savings officer Harriet Guevara expressed similar concerns about the potential changes.
"While we support the government's broader efforts to stimulate economic growth, we remain steadfast in our view that there's no guarantee that reducing the Cash Isa allowance would actually help," she said.
"In fact there's a real concern that it will simply lead to people saving less."
Almost eight million savers use Cash ISAs each year, according to figures cited by experts.
The Investing and Saving Alliance (TISA) chief executive Carol Knight said: "We're relieved that the chancellor has decided not to announce any immediate changes to the incredibly popular Cash Isa."
"Using a stick, by cutting the tax benefits of Cash Isas, is not the way to boost the investment culture in the UK," she added.
“We welcome the chancellor’s announcement that they will be working with the FCA to deliver a system of targeted support, which will help millions more make effective financial decisions and feel confident in investing their cash.”
Find Out More...
Chartered financial planners have voiced concerns that slashing Cash ISA allowances won't necessarily encourage savers to invest in markets instead.
They argue that Cash ISAs play a vital role in supporting economic growth by providing funds for bank lending to smaller businesses.
Scott Gallacher, chartered financial planner at Rowley Turton, said: "Trying to force savers to invest by slashing the cash ISA allowance is, quite frankly, a terrible idea."
"That money is loaned out to smaller businesses by UK banks," he explained.
"They are the backbone of the UK economy. Far from being inert, Cash ISAs support the very system that fuels economic growth across the country."
Greg Neall, chartered financial planner at Wake Up Your Wealth, criticised the language used in discussions about ISA limits.
"The language of this ISA limit saga has highlighted the slip of our industry into referring to investment as money in the markets, which is incorrect," he said.
He added: "We need to remember that one off investing, as opposed to regular saving, is irrespective of the asset class."
MORE LIKE THIS:
- Rachel Reeves scolded after handing electric car drivers 'disincentive' with HUGE car tax hikes: 'This is going backwards!'
- Donald Trump's tariffs 'knock out' Reeves's £10bn headroom just ONE WEEK after crippling cuts
- Rachel Reeves's tax hikes will see drivers slapped with £5,490 bill when buying new petrol and diesel cars
"This lazy language has led a Chancellor to believe that reducing a tax break on one asset class will make people buy another – it won’t, they will just pay tax on their deposits."
Nottingham Building Society chief savings officer Harriet Guevara expressed similar concerns about the potential changes.
"While we support the government's broader efforts to stimulate economic growth, we remain steadfast in our view that there's no guarantee that reducing the Cash Isa allowance would actually help," she said.
"In fact there's a real concern that it will simply lead to people saving less."
Almost eight million savers use Cash ISAs each year, according to figures cited by experts.
The Investing and Saving Alliance (TISA) chief executive Carol Knight said: "We're relieved that the chancellor has decided not to announce any immediate changes to the incredibly popular Cash Isa."
"Using a stick, by cutting the tax benefits of Cash Isas, is not the way to boost the investment culture in the UK," she added.
“We welcome the chancellor’s announcement that they will be working with the FCA to deliver a system of targeted support, which will help millions more make effective financial decisions and feel confident in investing their cash.”
Find Out More...