Reports indicate that Reeves plans to reduce the current tax-free allowance from £20,000 to £10,000 per year — effectively cutting it in half.
The move follows comments made just days earlier by City minister Lucy Rigby, who told guests at the Investment Association dinner that investors could more than double their wealth by putting money into the stock market.
Earlier speculation had suggested Reeves might slash the allowance even further, to £4,000.
TISA cautioned that lowering the cash ISA limit would punish savers and erode confidence in one of the UK’s most popular savings vehicles.
In contrast, AJ Bell’s director of public policy, Tom Selby, argued that the chancellor is “absolutely right” to question the current approach to Cash ISAs.
He said the existing, fragmented ISA system is “overly complex and behaviourally illiterate,” leading millions who could benefit from long-term investing to remain in cash — leaving their savings exposed to inflation.
Selby added that merging cash and investment ISAs into a single, unified product would be the “obvious long-term solution,” simplifying the system and breaking down barriers between saving and investing.
He also suggested that, to demonstrate support for UK markets as part of a retail investing push, the government could scrap stamp duty on UK shares purchased within ISAs — a “straightforward, low-cost measure” that would likely be welcomed by both retail investors and listed firms.