Summary
A group of MPs advised against cutting the cash ISA tax-free allowance in the upcoming Budget, as it might not promote investment as intended. Chancellor Rachel Reeves is considering various tax changes to address a £22bn Budget shortfall. The Treasury Select Committee suggests focusing on improving financial education instead of cutting the ISA allowance.
Key Facts
- Cash ISAs let people save up to £20,000 without paying tax on interest.
- A group of MPs advised Chancellor Rachel Reeves not to cut this allowance in the Budget.
- The Treasury Select Committee said reducing the allowance may not boost investment.
- Reeves is expected to announce tax increases or spending cuts to address a £22bn Budget shortfall.
- Current limits allow spreading up to £20,000 across cash and stocks and shares ISAs.
- The committee suggested improving financial education rather than cutting the allowance.
- £360bn is held in cash ISAs in the UK.
- The potential cut is intended to encourage investment in stocks and shares.
