In an open letter to the Chancellor, published today, a wide range of stakeholders have joined together to call on the Government to save Cash ISAs and maintain the current £20k limit.
Figures from HMRC show that over 18 million people have a Cash ISA. Almost half (47%) of Cash ISAs are held by people with incomes of less than £20,000 a year, and the average savings balance is just under £13,400[1].
Cash ISAs form a key part of many people’s savings, whether that is for their emergency buffer, saving towards a dream holiday, or protecting some of their wealth from changes in the stock market.
Beyond individual savers, Cash ISAs are an important source of funding for banks, building societies, credit unions and other providers which use the deposits to fund loans to households and businesses. Substantially reducing the role of Cash ISAs could lead to higher borrowing costs and reduced access to credit across the economy.
Robin Fieth, Chief Executive of the Building Societies Association said:
“Cash ISAs are used for a wide range of purposes—from saving for a first home to managing finances in retirement. These are not idle funds; they serve real, practical needs for both savers and the building societies, banks and other providers that receive the funds, and use them to support mortgage and other lending.
“Simply changing ISA limits is unlikely to encourage people to invest, but it will hurt people who are responsibly saving for short-term goals, where investing may not be appropriate.”
Cecilia Mourain, Chief Homebuying and Savings Officer at Moneybox commented:
“Cash ISAs are vital for building financial resilience, and reducing the tax-free allowance is unlikely to deliver on its intended objectives. Instead of supporting the Government’s ambition to build a stronger investing culture, it will discourage sensible saving behaviour, weaken demand for a popular product and disrupt the flow of capital that supports mortgage lending and economic stability.
