Treasury committee says move in November budget could push up mortgage rates instead
Cutting the annual cash Isa allowance will not encourage many savers to switch to shares but could push up mortgage costs, MPs have warned the chancellor.
Adults can put up to £20,000 a year in a tax-free Isa and spread the money between cash and stock market investments as they choose. In the 2023-24 tax year, 66% of all contributions went into cash savings.
Earlier this year, Rachel Reeves paused plans to limit the cash Isa allowance but in the run-up to next month’s budget there has been renewed speculation that it could be reduced to £10,000 in an attempt to promote growth.
The Commons Treasury committee said on Saturday that the chancellor should not cut the cash Isa allowance, arguing this was unlikely to encourage people to put their money into the stock market. What was needed instead, the MPs said, was better financial education so people were able to make informed decisions about their savings.
