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<\/p>\nRachel Reeves\u2019s overhaul of cash ISA rules has stalled after months of discussions failed to produce key decisions, leaving millions of savers facing continued uncertainty ahead of planned reforms.<\/p>\n
Treasury officials have spent three months in talks with the financial services industry but have yet to finalise how the new framework will operate in practice.<\/p>\n
Concerns have been raised by those involved in the process, with one source describing a lack of progress despite extensive engagement.<\/p>\n
The source said: “[The Treasury] has done three months of meetings, round tables, and emails [it] still can’t decide what to do. It doesn’t sound like it’s going well.”<\/p>\n
Uncertainty now surrounds major rule changes scheduled to take effect in April 2027, with key aspects of the policy still unresolved.<\/p>\n
Ms Reeves first announced plans to reduce the cash ISA allowance in last year\u2019s Budget, cutting the annual limit from \u00a320,000 to \u00a312,000 for savers under 65.<\/p>\n
Under the proposals, stocks and shares ISAs would retain the full \u00a320,000 allowance in an effort to encourage greater investment in UK markets.<\/p>\n
HM Revenue and Customs (HMRC) later confirmed it would introduce measures to prevent savers from bypassing the new limits by holding cash within investment accounts.<\/p>\n
Rachel Reeves cash ISA changes delayed<\/p>\n
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Rules are also expected to prevent transfers from stocks and shares ISAs and Innovative Finance ISAs into cash ISAs under the revised system.<\/p>\n
Forecasts published by the Treasury in March suggested the reduced allowance could raise an additional \u00a395million in tax revenue over five years.<\/p>\n
Despite this, several core elements of the policy remain unclear as draft legislation is expected later this year.<\/p>\n
Officials have not yet set out how interest earned on cash held within stocks and shares ISAs will be treated for tax purposes.<\/p>\n
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Uncertainty grows for millions of savers <\/p>\n
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Questions also remain over how so-called cash-like investments will be defined and whether they will face restrictions or additional charges.<\/p>\n
A previous system applied a flat 20 per cent tax to cash held in stocks and shares ISAs, and some firms have suggested reintroducing a similar approach.<\/p>\n
Industry figures have criticised the proposals, arguing that savers risk being penalised as part of wider efforts to reshape investment behaviour.<\/p>\n
A source said: “Savers should not be punished with a punitive tax penalty just to help achieve this misguided cash ISA cut.”<\/p>\n
The lack of clarity comes as the tax on savings income is due to rise by two per cent from April 2027.<\/p>\n
Tom Selby, director of public policy at AJ Bell, said: “The fact this hasn’t happened yet is staggering and leaves open the very real risk of unintended consequences.”<\/p>\n
He added: “Any move to tax cash or cash-like investments in stocks and shares ISAs, both of which play a central role in retail investing, has the potential to undermine the very product policymakers are attempting to encourage people to use.”<\/p>\n
A Treasury source said officials had been working with HMRC and industry representatives on anti-circumvention rules, while confirming that the framework has yet to be finalised.<\/p>\n
Alongside the reforms, a Government-backed campaign encouraging people to invest rather than save is expected to launch later this week.<\/p>\n
The Treasury declined to comment further on the ongoing discussions.<\/p>\n","protected":false},"excerpt":{"rendered":"Rachel Reeves\u2019s overhaul of cash ISA rules has stalled after months of discussions failed to produce key decisions,…\n","protected":false},"author":2,"featured_media":543201,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,1085,2222,229,1445,3668,56,44208,54,55],"class_list":{"0":"post-543200","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-isa","11":"tag-money","12":"tag-politics","13":"tag-rachel-reeves","14":"tag-savings","15":"tag-uk","16":"tag-uk-politics","17":"tag-united-kingdom","18":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/543200","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=543200"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/543200\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/543201"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=543200"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=543200"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=543200"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}