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Money expert Martin Lewis has given his take on Labour’s autumn Budget, which brought in a string of tax rises and tweaks for UK savers.
Speaking at the fiscal event, chancellor Rachel Reeves confirmed that the cash ISA limit will be reduced from £20,000 to £12,000, while the the Stocks and Shares Isa would stay at the higher limit.
This means savers could save £12,000 in a cash ISA and the remaining £8,000 in a stocks and shares ISA, for instance.
It’s understood that the move was made to incentives younger savers to invest, with over-65s being made exempt from the change.
Reacting to the announcement, Mr Lewis said he thought cutting the limit was the “wrong move,” having previously been outspoken against the plan when it was first rumoured.
open image in galleryMartin Lewis says Cash Isa cut was the “wrong move” (ITV)Speaking on Good Morning Britain on Thursday, he said: "I've had a number of discussions with the chancellor over the last year. The reason that the cash ISA is being cut is not primarily a revenue raise, it's because they want to encourage more young people to invest.
"My view is that it would be better to do that by a carrot approach than a stick approach. I would like to see better education about investing.
"I would like easier access to guidance and what to invest in. I would like to see incentives put into investing. A little bit of that is going to happen, not the incentives."
However, the money expert also concedes that the £12,000 limit is still relatively high for most savers, requiring at least £1,000 to be saved a month to maximise.
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open image in galleryChancellor Rachel Reeves delivered Labour’s second autumn Budget on Wednesday (Adrian Dennis/PA) (PA Wire)According to HM Revenue and Customs (HMRC) figures released in September, around 15 million adult ISA accounts were subscribed to in 2023/24, up from 12.4 million in 2022/23.
Just under 10 million adult Isa accounts subscribed to in 2023/24 were cash ISAs, marking a 2.1 million increase compared with 2023/24.
Around £103 billion was subscribed to adult ISAs in 2023-24, an increase of £31.4 billion compared with 2022/23. The increase was driven by the rise in cash ISA subscriptions, which grew by £27.9 billion, HMRC said.
Tom Selby, director of public policy at AJ Bell said: “Rather than rushing ahead with ill-thought-out Isa changes at this Budget, the Chancellor needs to step back from the precipice and gather evidence on the best way to reform Isas to support retail investors.
“There is no obvious benefit to investors, the economy or the Government from ploughing on with half-baked reforms that are unlikely to be effective and will be widely criticised by the industry and the general public.”
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