UK Savers Pile Record £14bn Into Cash ISAs Amid Allowance Cut Speculation
UK Savers Pile Record £14bn Into Cash ISAs Amid Allowance Cut Speculation

UK Savers Pile Record £14bn Into Cash ISAs Amid Allowance Cut Speculation

News summary

In April, UK savers deposited a record £14 billion into Cash ISAs, the highest monthly amount since their introduction in 1999, driven by higher interest rates and fears of a potential cut to the cash ISA allowance. This surge, partly fueled by a 'use it or lose it' mentality, reflects many moving money from regular savings accounts into ISAs to benefit from tax protections amid rising taxes on savings interest. Chancellor Rachel Reeves has confirmed that while the overall £20,000 ISA allowance will not be reduced, there is consideration of limiting how much can be held in cash ISAs to encourage more investment in stocks and shares to boost economic growth. However, experts and banking representatives warn that cutting the cash ISA limit might not lead to increased stock market investment but rather push savers towards taxable savings accounts, effectively acting as a stealth tax. The government aims to foster a stronger retail investing culture, though skepticism remains about the effectiveness of reducing cash ISA limits in achieving this goal. Meanwhile, attractive cash ISA rates, despite recent declines following Bank of England rate cuts, continue to make these accounts appealing, especially in uncertain economic times.

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Right 67%
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Last Updated
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