According to a survey by the Building Societies Association, most cash ISA savers are firmly against any Government plans to reduce or scrap the tax-free savings allowance.
Just 8% of respondents supported cutting the current £20,000 annual allowance, while 73% wanted to maintain the existing system. The survey follows speculation that the Chancellor may be considering changes to encourage investment in stocks and shares ISAs – an idea widely opposed by savers.
Security remains a key concern, with 90% of cash ISA holders saying it’s important to get back at least what they have saved. Unlike stocks and shares ISAs, cash savings offer this guarantee.
HMRC data shows that nearly half (47%) of cash ISA holders earn less than £20,000 a year and have an average balance of just under £13,400.
The Treasury has not confirmed whether it is considering cutting the tax-free allowance to £4,000 – similar to the limit for lifetime ISAs – but with the Spring Statement set for 26 March, potential tax-raising measures are under review. ISAs cost the Government around £7 billion a year in tax relief.
Currently, only 20% of ISA holders have stocks and shares in ISA, and most are high earners.
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