Households are rushing to put money into cash ISAs before a major rule change next year. The tax-free cash ISA limit is being slashed from £20,000 to £12,000 for under-65s next April under changes confirmed by Chancellor Rachel Reeves. This will impact how much millions of people can make in interest from these accounts, in a major blow to savers.
Details of the Rule Change
Savers will still be able to put another £8,000 into stocks and shares ISAs. It means those with cash ISA accounts have less than a year to make the most of the £20,000 allowance. Pensioners are being protected from the changes and will still be able to take advantage of the £20,000 limit.
Expert Commentary
Andy Wood, tax expert at Tax Barrister UK, said the latest figures suggest many savers are choosing to act before the new rules take effect. He said: "Whenever people know tax rules are going to become less favourable, it's common to see a rush to take advantage of the existing allowances while they still can."
Wood added: "For anyone who has the means to do so, the current £20,000 cash ISA allowance represents an opportunity that may not be available again once the changes come into force next April."
Advice for Savers
Andy went on: "Many people leave tax planning until the end of the tax year, but this is one of those occasions where planning ahead could make a real difference. If you have significant cash savings, it's worth reviewing whether you're making full use of available tax-efficient allowances and whether your savings are still held in the most appropriate accounts for your circumstances."
