Rachel Reeves, UK Chancellor, announced reductions to allowance for tax-free cash savings in a push to get the public to allocate more funds into stocks and shares to boost the economy. However, backlash from building societies and banks has led to these plans being shelved.
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Individual Savings Accounts (ISAs) are tax-free savings accounts in which people can save funds by building on interest, gaining more interest the more funds that are in the account. ISAs can have cash or stocks and shares. Every tax year an individual can save up to ÂŁ20,000 in one account or split across multiple accounts.
Banks and building societies that run cash ISAs have opposed the reductions, while investment companies who sell stocks have backed it. The opponents to the change outlined how lowering the cash ISA limit would also limit what people get out of their savings, and impact how they save. Furthermore, it the banks and societies running those accounts would receive less from saver’s deposits that would go into mortgages and loans.
A UK Treasury spokesperson told BBC: “Our ambition is to ensure people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy.”
Further government plans on the adjusting ISAs will likely be addressed during Reeves’ Mansion-House speech that will take place on 15 July.
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