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One of the biggest talking points this year has been the UK’s Cash Isa and what alterations Rachel Reeves may make to it. Early suggestions included removing it entirely, but more recent news has suggested a cap on the amount which can be saved, which is currently set at £20,000 per person per tax year (across all Isa types).
For the uninitiated, saving money within an Isa makes it exempt from tax on interest earned. It is estimated that around £300bn in total sits in Cash Isas, which some have suggested could be put to better use were it invested, for example in a Stocks and Shares Isa. While it’s true that over the long term this can generate better returns than cash, this approach doesn’t factor in how or when people may need to access their cash. This has led to widespread debate among City executives, politicians and beyond about potential reform.
