Martin Lewis warns Rachel Reeves’ money ISA reduce plan will upset hundreds of thousands

[ad_1] Your help helps us to inform the story From reproductive rights to local weather change to Huge Tech, The Impartial is on the bottom when the story is creating. Whether or not it is investigating the financials of Elon Musk's pro-Trump PAC or producing our newest documentary, 'The A Phrase', which shines a lightweight on the American girls combating for reproductive rights, we all know how vital it's to parse out the info from the messaging.

At such a essential second in US historical past, we want reporters on the bottom. Your donation permits us to maintain sending journalists to talk to each side of the story.

The Impartial is trusted by Individuals throughout your complete political spectrum. And in contrast to many different high quality information shops, we select to not lock Individuals out of our reporting and evaluation with paywalls. We imagine high quality journalism needs to be accessible to everybody, paid for by those that can afford it.

Your help makes all of the distinction. Learn extra Plans by chancellor Rachel Reeves to scale back the quantity that savers could put into money ISAs will upset hundreds of thousands of individuals however not obtain what she desires, cash skilled Martin Lewis is warning.

In her Finances subsequent month, Ms Reeves is anticipated to shake up the principles on tax-free ISAS, chopping everybody’s annual allowance from £20,000 to £10,000.

She desires to encourage individuals to place their cash into shares in British corporations as an alternative of money Isas, fostering an American-style funding tradition within the UK.

One choice being thought of is halving the restrict allowable in money ISAs, the FT studies.

However Mr Lewis, founding father of the MoneySavingExpert model, stated a money ISA restrict reduce would frustrate individuals with out encouraging them to put money into shares, which Ms Reeves hopes will divert billions of financial savings into home shares.

“A money ISA reduce would merely p*** hundreds of thousands of typically older individuals off and I doubt will change the dial on investing,” he wrote on social media.

<img src="https://static.independent.co.uk/2025/10/14/22/d0af22183867f555ea50ec1352b97e36Y29udGVudHNlYXJjaGFwaSwxNzYwNTQ5NjE2-2.81945561.jpg" srcset="https://static.independent.co.uk/2025/10/14/22/d0af22183867f555ea50ec1352b97e36Y29udGVudHNlYXJjaGFwaSwxNzYwNTQ5NjE2-2.81945561.jpg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2025/10/14/22/d0af22183867f555ea50ec1352b97e36Y29udGVudHNlYXJjaGFwaSwxNzYwNTQ5NjE2-2.81945561.jpg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Chancellor Rachel Reeves wants to overhaul rules on tax-free Isas (Paul Grover/Daily Telegraph)" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Chancellor Rachel Reeves desires to overtake guidelines on tax-free Isas (Paul Grover/Each day Telegraph) (PA Wire) “It'd simply imply extra tax paid on saving, and an issue for constructing societies elevating money for mortgages.”

The Treasury would obtain extra tax from savers in the event that they put cash into customary financial savings accounts that weren't shielded from tax.

Within the 2023-24 monetary yr, savers put virtually £70 billion into money ISAs – a 67 per cent rise year-on-year, and greater than 15 million individuals used some or all of their allowance, authorities figures present.

It’s anticipated that this yr’s ISA figures will probably be larger nonetheless, pushed by expectations that Ms Reeves would reduce the allowance.

Get a free fractional share value as much as £100.Capital in danger.

Phrases and circumstances apply.

Go to web site ADVERTISEMENT

Get a free fractional share value as much as £100.Capital in danger.

Phrases and circumstances apply.

Go to web site ADVERTISEMENT

<img src="https://static.independent.co.uk/2025/10/15/14/16/20251015_151715.jpg" srcset="https://static.independent.co.uk/2025/10/15/14/16/20251015_151715.jpg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2025/10/15/14/16/20251015_151715.jpg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="The chancellor thinks too many people are saving in cash" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

The chancellor thinks too many individuals are saving in money (Jane Dalton) Again in February, it was reported that she was contemplating lowering the annual restrict to £4,000. She later dropped the plan, however now seems to have revived the concept of reforming ISAs.

She has argued that investing extra in shares would boosts British companies and create larger returns for buyers.

Mr Lewis acknowledged {that a} “lack of investing is an issue” however insisted chopping the money Isa restrict was not the answer.

“In the event that they [the Treasury] have been saying they have been doing it to lift income, a minimum of that may be logical,” he wrote.

<img src="https://static.independent.co.uk/2025/09/02/10/49/Martin-Lewis-on-scammers-using-his-image.png" srcset="https://static.independent.co.uk/2025/09/02/10/49/Martin-Lewis-on-scammers-using-his-image.png?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2025/09/02/10/49/Martin-Lewis-on-scammers-using-his-image.png?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Martin Lewis said cutting the annual allowance would not boost shares savings" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Martin Lewis stated chopping the annual allowance wouldn't enhance shares financial savings (ITV) “What is required is for them to encourage funding, higher schooling, and higher incentives.”

He proposed a youthful individuals’s “starter funding Isa bonus” on the primary £2,000 invested, funded by funding corporations.

Savers could break up their £20,000-a-year Isa allowance between various kinds of ISAs, together with money ISAs, stocks-and-shares ISAs and lifelong ISAs.

A Treasury spokesperson stated: “Money financial savings are vital for individuals seeking to put money away for a wet day, and we'll defend that. However the chancellor has been clear that she desires to get Britain investing once more – so British corporations can develop and British savers who select to can get extra in return.”