Chancellor Rachel Reeves has come under fire from Reform UK's Treasury spokesman Robert Jenrick over new changes to Individual Savings Accounts (ISAs). The Chancellor has reduced the tax-free cash ISA allowance from £20,000 to £12,000 and introduced a 22% tax on interest on cash held in stocks and shares ISAs, where the limit remains at £20,000, to close a potential loophole for uninvested money.
Jenrick's Furious Attack in the Commons
Speaking in the House of Commons, Jenrick said: “People have already paid taxes on their ISA savings; slapping a 22% tax on them is a total betrayal of people who have worked hard and done the right thing. Rachel Reeves should stop wasting money on things like foreign aid and benefits for foreigners and leave our savers alone.”
He added: “Tax-free ISAs are tax-free, it's a very simple principle, it's existed for 30 years, it's why 22 million people in our country have invested their savings in them, 409% of the adult population. And yet in the final act of the Chancellor she's decided to slap a 22% tax on cash in stocks and shares ISAs. Is there nothing that she doesn't want to tax?”
Jenrick called for a debate on the changes, asking: “Does the Chancellor intend to come to Parliament and account for her actions or can we have a debate on this in the name of the 22 million savers in this country who are being let down?”
Treasury Minister Defends the Changes
Treasury minister Sir Alan Campbell responded, saying: “The reality of the situation here is very simple, I'm surprised he doesn't understand that. The new cash ISA limit introduced by the Chancellor at the budget in 2025 will help to encourage retail investment and drive better returns for savers.”
He added: “We're confident that we struck the right balance between supporting normal investor behaviour while preventing routes to replicate a higher cash ISA allowance within stocks and shares and innovative finance ISAs. The new charge is aimed at deterring long-term holding of cash in ISAs that should be used for investment. We've designed the rules to be as simple as possible to maintain maximum flexibility for savers to make sure that an investment portfolio works for them. But normal investor behaviour such as holding cash in a non-cash ISA prior to investment will not be prevented by the introduction of the tax changes.”
Impact on Savers
The changes mean that from the 2025 budget, savers can only put up to £12,000 per year into a tax-free cash ISA, down from £20,000. Meanwhile, the stocks and shares ISA allowance remains at £20,000, but interest on cash held in these accounts will be taxed at 22%. The government argues the move encourages investment over cash savings, but critics say it penalises prudent savers who have already paid tax on their income.
