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THERE HAD BEEN TALKS OF SIGNIFICANTLY REDUCING THE ALLOWANCE TO ENCOURAGE MORE PEOPLE TO INVEST THEIR MONEY 15:04, 20 May 2025Updated 15:04, 20 May 2025 Chancellor Rachel Reeves has

announced she does not plan to reduce the £20,000 limit on the amount that can be put into Isas each year. Previously, the Chancellor of the Exchequer had expressed the idea of lowering the

annual cash Isa allowance from £20,000 to £4,000 - a move that aimed to encourage more people to put their money into investments. Several organisations, including building societies, pushed

back against the idea. In an interview broadcast on BBC Newscast, Ms Reeves was questioned on whether or not the limit could be reduced over the next couple of years. Ms Reeves told the

programme: "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. "I do want

people to get better returns on their savings," she added. "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."

Ms Reeves continued: "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." The

Chancellor's comments come days after Emma Reynolds, the Economic Secretary to the Treasury, suggested during a Lords committee that Isas are draining investment from the London Stock

Exchange. The Government last month confirmed it is looking at options for reform, while Treasury costings documents released with the spring statement assume the overall Isa limit of

£20,000 remains in place up to and including 2029/30. 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. Commenting on Tursday's 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". Article continues below 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."