Rachel Reeves says £20,000 annual Isa limit will stay

Chancellor Rachel Reeves has confirmed she does not plan to reduce the £20,000 limit on the amount that can be put into Isas each year.

In an interview broadcast on BBC Newscast, Ms Reeves was asked whether if, in a few years’ time, someone would be able to put a whole £20,000 per year into an Isa, as they are able to do now.

Ms Reeves told the BBC: “First of all, very few people are able to save £20,000 a year… we still want people to be able to save and I’m certainly not going to reduce that limit.”

Several different types of account come under the umbrella of Isas, including those where people’s money is held in cash, as well as stocks and shares Isas.

Earlier this year, there was speculation that the idea of lowering the annual cash Isa allowance to £4,000, from £20,000, was being mooted, to encourage more people to put their money into investments.

Several organisations, including building societies, pushed back against the idea.

Treasury costings documents that were released with the spring statement assume the overall Isa limit of £20,000 remains in place up to and including 2029/30.

Ms Reeves told the BBC: “I’m not going to reduce the limit of what people can put into an Isa but I do want people to get better returns on their savings, whether that’s in a pension or in their day-to-day savings.

“And at the moment, a lot of money is put into cash or bonds when it could be invested in equities, in stock markets and earn a better return for people.

“And so, one of the reasons why we’re looking at advice and guidance that financial firms can give to their customers is to make sure that people are making informed decisions about how to invest their money, whether that’s their pension savings, or their Isa savings.

“So those are things that we’re looking at, but I absolutely want to preserve that £20,000 tax-free investment that people can make every year.”

Commenting on the interview, Jason Hollands, managing director of online investment platform Bestinvest said: “To get more people investing in equities requires a combination of better education, an appropriate regulatory environment so they can get the help they need in choosing a suitable investment, and the potential carrot of additional incentives.”

He added that “parts of the City” are “pushing for an overhaul of stocks and shares Isas, urging the Chancellor to refocus these on UK equities to help revitalise the UK market”.

He continued: “Such arguments might appeal to a Chancellor keen to see increased investment in UK domestic assets, but if she is minded to do this then we would urge a carrot rather than a stick-based approach.

“A mandated limit on overseas investment within Isas would reduce flexibility and returns for savers, and it would be unlikely to drive more people to invest.”