1 week Ago By [email protected] (James Rodger)
A "dangerous" ISA shake-up could be introduced by Chancellor Rachel Reeves as we head deeper into autumn. The new Labour Party Chancellor is set to introduce ISA accounts next week, according to reports, as she delivers her Autumn Statement. Ms Reeves could target ISAs in her Budget next week - after previously floating a £500,000 lifetime limit on the tax-free accounts.
Ms Reeves called for a £500,000 limit on the amount that savers could put into the tax-free wrappers in an article for The Independent in 2016. Savers and investors have a £20,000 annual allowance to channel into ISAs every year. Jason Hollands, of wealth manager Evelyn Partners, said: "Meddling with ISAs would be quite dangerous for any Chancellor to do.
It would very visibly be something that would not be popular." READ MORE Millions of drivers will wake up to £145 bill next week at 'worst possible time' Currently, there is no lifetime limit. However, if one was introduced it could spell the end of investors accruing seven-figure tax-free sums inside the wrappers.
Sarah Coles, from Hargreaves Lansdown, said: "It runs the risk that it affects those who are considering investing." When Ms Reeves wrote the article in 2016, the ISA limit was just £15,000. She said the Government should introduce a ‘lifetime allowance of £500,000 for ISA investments and freeze the annual limit at £15,000 for the remainder of this parliament’.
She added the Government should match the first £100 that each saver puts in an ISA for basic rate taxpayers. A spokesman for the Treasury said: "Decisions on tax are made in the round at the Budget." Over a quarter of a million people have at least £250,000 in their ISA, with 30,000 savers holding between £500,000 and £750,000.
A £500,000 cap could affect long-term savers more than expected. Hargreaves Lansdown calculates that an investor contributing just half of the current annual allowance for 25 years, assuming 5% annual growth, would breach this limit..
