Expert issues ISA warning after Rachel Reeves blocks ‘workarounds’ | Personal Finance | Finance
An expert has issued an ISA warning to savers after Rachel Reeves blocked “workarounds”. People can currently newly save up to £20,000 annually in cash ISAs, stocks and shares ISAs, or a mix of both. But the Chancellor announced in the Budget that, from April 2027, the annual adult cash ISA limit will be slashed to £12,000. Antonia Medlicott, Founder and Managing Director of financial education specialists Investing Insiders said that Brits should explore their options. People may need help understanding investing their cash, and it can be intimidating, she added.
But the expert emphasised that holding money in a savings account does not come without risk either, as inflation could mean it loses value. Ms Medlicott said: “With Chancellor Rachel Reeves slashing the annual cash ISA limit in November’s Budget to just £12,000 for those under 66, get ready for a drive to get more of us investing.
“As someone who speaks to new and nervous investors every day, I am absolutely in favour of more education on the benefits of investing.
“But I also understand that it’s a scary topic for those who’ve never invested before, and people will need help understanding when investing can be a better option than a savings account, as well as when it is not.
“Although the change won’t take effect until April 2027, don’t delay the conversation.
“The Government has ruled out workarounds like shifting from stocks and shares ISAs into cash ISAs, so now is the time to explore your options.”
Ministers have said that new rules will be introduced to avoid circumvention of the lower cash limit.
These will include no transfers from stocks and shares and Innovative Finance ISAs to cash ISAs.
There will also be tests “to determine whether an investment is eligible to be held in a stocks and shares Isa or is ‘cash like’.”
Charges could also be applied on any interest paid on cash held in a stocks and shares or Innovative Finance Isa.
The rules will apply to investors under the age of 65, HMRC said.
Ms Medlicott said: “It’s important to remember that while investing does put your capital at risk, not all investing is equally risky. Security, peace of mind and investing can go together.
“The past few years have seen the launch of many simple and cheap Stocks and Shares ISAs, specifically designed for the needs of new investors and those who don’t have the time to get into researching individual stocks.
“It’s also important to remember that leaving your cash in a savings account is not without risk either.
“If the interest paid doesn’t keep up with inflation, your money is losing real-world value, so it’s all about understanding what level of risk and return you’re comfortable with.
“Start with the basics. Investing is not about betting your life savings on ‘hot stocks’; it’s about making smart decisions with your money that allow you to benefit from growth over the long term.”
