Last Call For ISAs

‼️ It’s your final opportunity to get any extra cash into an ISA to get it wrapped safely away from tax. The allowance resets at the end of tomorrow and you cannot carry it forward. It looks like Rachel Reeves may be moving forward with ISA reform plans so things will change.

Potential Reforms to Cash ISAs

Chancellor Rachel Reeves has indicated that reforms to Cash ISAs are under consideration. The government aims to encourage more investment in equities to stimulate economic growth. Proposals include capping annual Cash ISA contributions, with figures as low as £4,000 being discussed. While no immediate changes were announced in the recent Spring Statement, further details may emerge in the Autumn Budget.

Implications for Savers

The potential reduction in the Cash ISA allowance has sparked debate. Many savers prefer the stability of cash savings over the volatility of stocks and shares. A significant decrease in the allowance could impact those who rely on Cash ISAs for tax-free interest, particularly risk-averse individuals and people wanting to hold larger amounts in cash for more spending plans within the next 5 years.

Interest on cash savings held outside of ISAs is taxable. If you are a basic rate tax payer, you can earn up to £1,000 over interest across all of your cash without paying tax. For higher rate tax payers, this is reduced to £500. So, if your cash is in a 4% interest account and the balance is over £25,000 then a basic rate tax payer would have a tax liability. For Higher Rate tax payers, that reduces to balances of £12,500.

What Should You Do?

If you have a large amount of money held in cash and need to keep it there, make sure as much of it as possible is held in a Cash ISA. Remember each adult has £20,000 so for a couple you can wrap £40,000 a year into an ISA. If the plan to limit Cash ISA allowances them this will severely impact the ability to hold larger amounts of cash tax free.

Key Articles I Have Read This Week:

• The big global news this week for money has been centered around tariffs. We have yet to see the impact but there is concern on how the UK can adapt: Read it here

• The start of a new tax year means bills are going up. The BBC explore which bills are increasing and ways to cushion the impact: Read it here

Investment Markets This Week:

Best Cash Savings Rates This Week

🪖 I’ll Do A More Sensible Look at The Impact of the Trade Wars Soon…

But for now, I’ll leave you with this….