HMRC staff have spoken out to the Treasury Committee, defending the policy change.
HMRC making anyone who is aged 65 and over exempt from new rule (Image: )
HMRC has spoken out over under-65s being exempt from new cash ISA restrictions from the Labour Party government. HMRC staff have spoken out to the Treasury Committee, defending the policy change.
Cerys McDonald, director of Individuals Policy at HMRC, said: “Those changes will require regulation. We will be laying regulations in Parliament with all the framework of rules that we will need to support that policy change.”
She said these regulations will be set out in Parliament “in due course”. She said: “I think the Chancellor was really mindful of the fact that people of pensionable age have got different risk reward appetites and are more conscious of liquidity than people not of pension age.
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“That informed the decision to restrict the cash limits for those under 65 as opposed to those over 65.
“Of course, we always take legal advice when we are advising ministers on policy changes. We’ve got really good data to support that liquidity argument.
“We know that those with ISA holdings over 65 hold more of their ISA savings in cash ISAs. I’m confident that is a legally robust policy decision.”
Under plans confirmed by Labour Party Chancellor Rachel Reeves at November’s budget, the cash ISA allowance will be slashed from £20,000 to £12,000 from April 2027, with the exception of savers aged under 65.
The chancellor said the move was aimed at stimulating greater investment in the UK stock market, with the £8,000 balance available for investment in stocks and shares ISA products.
One industry figure who attended Tuesday’s talks said: “It became abundantly clear at the meeting today that significant reforms to ISAs are being made on the hoof with little understanding of how retail investors behave or the extent of potential unintended consequences.
“HMRC has been put in an invidious position of trying to implement changes that are fundamentally flawed.
“Rather than rushing to do something which risks undermining retail investing, the chancellor should go back to the drawing board and build an evidence base for sensible, long-term reforms aimed at supporting retail investors.”
A government spokesperson said: “To encourage greater investment in stocks and shares, we’re developing changes to ISA rules which will prevent circumvention of the new lower cash ISA limit.
“We’re already working closely with industry and will publish clear guidance before the changes come into effect.”