Banks and building societies, who offer cash Isas, are predictably relieved that the annual cash ISA allowance is expecte to now remain at £20,000.
Lawrence Chan, head of savings at Nottingham Building Society, says it would be “great news”:
It suggests that the government understands that many people value having a secure plan they can stick to and not just chasing the highest return. A Cash ISA is a familiar and straightforward way to build a deposit for a first home, keep money back for unexpected costs or simply feel more secure about the future.
“People should have the confidence to choose the saving or investment option that works for them based on their own circumstances and plans. Encouraging people to consider investing for the longer term matters but reducing the Cash ISA allowance would not have been the right way to do it. It would have made a trusted route to saving less useful for the people who rely on it.
“Cash savings and investments have different roles, and most people need both at different points in their lives. What they need from government is clarity, stability and enough time to make decisions with confidence. For building societies, members’ savings help fund mortgages for people buying homes in the communities we serve. Keeping the current allowance would protect a popular way to save while helping maintain the deposits that support lending, including for first-time buyers.”
Jason Hollands, managing director at online investment platform Bestinvest by Evelyn Partners (which is part of NatWest Group), agrees it will be “welcome news” for savers:
‘The Government had argued that the rationale for cutting the Cash ISA allowance was to steer more people to invest, rather than it being a revenue raising measure. Encouraging more people to invest is a worthy and welcome project but cutting the amount people can save in a Cash ISA seemed like a blunt instrument to try and achieve this. Further complications around flagged anti-circumvention measures for investment ISAs threatened to damage understanding of and trust in both products.
‘I suspect many of those who would have felt limited by the planned reduction to Cash ISA allowances for under 65s would simply have put their cash in taxable savings account instead, making them worse off.