By Christian Abbott
Financial experts have issued a warning to anyone with a Cash ISA as recent reports indicate Chancellor Rachel Reeves will cut the tax-free limit of a Cash ISA. It is believed she will slice the limits in half, from 拢20,000 to just 拢10,000, in a bid to get more money into stocks and shares rather than cash. Individuals can currently put 拢20,000 a year into tax-free saving across all types of ISAs – including cash ISAs, stocks and shares ISAs, Lifetime ISAs, and Innovative Finance ISAs. Read more: Lloyds Bank offering customers 拢185 with payment made within 10 days There is no separate cap on the cash portion, meaning the full 拢20,000 can currently be held in cash if preferred. City think tank New Financial believes that the current limit is holding the stock market back and it should be targeted to encourage investment. Philly Ponniah, Chartered Wealth Manager and Financial Coach at Philly Financial , urged Cash ISA users not to panic, saying: 鈥淭here鈥檚 a deep knowledge gap in the UK when it comes to investing, and potential policies like this one completely ignore that reality. “The idea that capping tax-free cash savings will nudge people into the stock market assumes fear, confusion and a lack of education aren鈥檛 huge barriers, but they are. “This proposal doesn鈥檛 empower people to invest, it pressures them, which is not the same thing. If you have a Cash ISA, don鈥檛 panic, nothing鈥檚 confirmed yet. “Review your goals: if the money鈥檚 long-term, it could be time to explore investing. Cash feels safe, but inflation erodes its value over time. “Wealth is built through investing, but only when people have the confidence and support to get started. Education should come before restriction.鈥 Samuel Mather-Holgate, Independent Financial Adviser at Mather and Murray Financial , said he did not expect Reeves to go through with the plans, adding: 鈥淭his Government, and this Chancellor, are so unpopular now that this would be electoral suicide. It simply can’t happen. “However, if you don’t need your cash in the next five years, you should really be investing your money rather than keeping it in cash. Cash is the only way you are sure to erode its value over the long term. “Reeves will have learned that tinkering with the small stuff doesn’t bring in much money and really annoys people whose views can be the loudest.鈥 Wes Wilkes, CEO at IronMarket Wealth , said the move was a waste of time, explaining: 鈥淭he Government and think tanks are completely out of touch. If they think halving the Cash ISA allowance is going to make a jot of difference to UK-centric investing, they鈥檙e utterly delusional. “Cash ISA holders either use them for cash reserves or because they鈥檙e still scared to invest. 拢10k a year isn鈥檛 going to make a jot of difference to the way people think or behave. It’s a pointless waste of policy and paper.鈥