Chancellor Rachel Reeves is facing mounting criticism after reports suggested she is preparing to slash the tax-free cash ISA allowance, a move opponents say amounts to a “tax raid” on hardworking savers.
Reeves will announce her second Budget on Wednesday, where she is expected to introduce a range of tax increases to help close a £22bn gap in the public finances.
According to sources familiar with Budget discussions, cited by the Financial Times, the Chancellor plans to reduce the annual cash ISA allowance from £20,000 to £12,000. The intention behind the cut is reportedly to encourage more households to move their savings into UK equities, boosting investment in the domestic stock market.
The proposals have sparked strong political backlash. Conservative shadow chancellor Sir Mel Stride argued that “hardworking savers shouldn’t be facing a tax raid to fund Labour’s addiction to ever more welfare spending,” criticising the Government for what he described as unnecessary pressure on ordinary households.
The reported ISA changes come alongside suggestions that Reeves is preparing to introduce a new levy on the country’s most expensive homes, dubbed a “mansion tax” by critics. The measure is expected to affect thousands of high-value properties and forms part of a wider strategy to target wealthier households in the upcoming Budget.
Additional revenue-raising policies are also anticipated, including a profits tax on gambling companies and a fresh levy on bank profits. These steps are understood to be central to Labour’s plan to plug the fiscal shortfall while maintaining commitments on NHS funding, growth investment and public sector reforms.
Reeves will set out the full details of her Budget to MPs in the House of Commons, with financial markets, homeowners and savers all watching closely for confirmation of how the tax changes will take shape.
