Reeves plans dramatic ISA overhaul, slashing tax-free limit to £4,000

Chancellor Rachel Reeves is considering significant changes to the UK ISA system, potentially reducing the cash ISA annual allowance from £20,000 to just £4,000. This proposal follows discussions with senior City executives who are advocating for a shift towards investing in stocks and shares to stimulate economic growth. While Reeves has stated she will not eliminate cash ISAs entirely, the push is aimed at fostering a more robust investment culture among savers. Critics, including pensioners who rely on cash ISAs for tax-free income, are concerned that such a move could adversely affect those with lower risk tolerances. The proposed changes are part of a broader strategy to enhance tax-free savings and potentially reshape how millions of Britons manage their finances. The Chancellor's Spring Statement on March 26 will provide further clarity on these potential reforms.