New Cash ISA rules slammed by Martin Lewis as he warns ‘it’s the wrong way to do it’ | Personal Finance | Finance
Martin Lewis has butted heads with Rachel Reeves over her decision to cut the Cash ISAs limit down to £12,000. Speaking to the Chancellor on his programme The Martin Lewis Money Show Live, he said the reduction is “the wrong way” to get younger people investing, which Ms Reeves claims is the reason for lowering the limit. Under the new rules, savers will still be able to put £20,000 a year into tax-free ISAs like they can now, but Cash ISAs will be limited to just £12,000, instead of the full £20k. Those wanting to use the full £20k allowance will have to put the other £8,000 into a Stocks and Shares ISA instead.
The money saving expert said: “In a meeting with the Chancellor two weeks ago, I knew the writing was on the wall and this was happening – I think this is the wrong way to do it by the way, I think there are other ways to encourage people to invest instead.” Speaking to the Chancellor, Mr Lewis said: “I disagree with you over the solution.”
Ms Reeves responded: “90% of people with savings will still have no tax on their savings, you can still put £12,000 in.”
Mr Lewis was quick to push the Chancellor further, asking if she “really thinks cutting the Cash ISA limit will make a substantial difference to the amount of people who invest”.
She said: “If we were doing that on its own, you’re probably right, but we’re not doing it on its own. We’re at the same time changing the advice and guidance… I’ve worked with the Financial Conduct Authority to get these changes, and they’ll start this coming this ISA year.”
The new rules will take effect from April 2027 but will not affect existing deposits. But state pensioners will be allowed to keep the full cash ISA allowance, Ms Reeves said in her speech.
Online hubs will be set up which are designed “to help people invest” in the UK, Ms Reeves said as she set out reforms to the ISA system.
The Chancellor told MPs: “From April 2027, I will reform our ISA system, keeping the full £20,000 allowance while designating £8,000 of it exclusively for investment, with over-65s retaining the full cash allowance.
“And thanks to our changes to financial advice and guidance, banks will be able to guide savers to better choices for their hard-earned money.
“Over 50% of the Isa market – including Hargreaves Lansdown, HSBC, Lloyds, Vanguard and Barclays – have signed up to launch new online hubs to help people invest here in Britain.”
