Labour has clarified its stance on ISAs, following the reports suggesting potential reforms.
The clarification came in response to a parliamentary question from Lord John Lee about how ISA investments in overseas markets contribute to the UK economy and the Government's "growth agenda".
There had been speculation that the Government was considering introducing a £4,000 cap on cash ISA deposits to encourage more investment in stocks and shares.
However, Labour has now made it clear that the existing allowance of £20,000, which can be split across different types of ISAs, will remain unchanged.
Responding to the query in Parliament, Lord Livermore emphasised the Government's commitment to encouraging saving and investment.
He said: "The Government is committed to incentivising greater saving and investment, to help people save for their future goals and build greater financial resilience.
Lord Livermore further explained that the Government offers "generous tax treatment on ISAs to support people of all incomes and at all stages of life to save."
The Chancellor is being urged to reform lifetime ISA rules
GETTY / PAThe tax advantages of ISAs apply to both UK and international investments, providing flexibility for savers looking to diversify their portfolios.
While maintaining the current allowance, Lord Livermore indicated the Government is exploring potential reforms to ISAs.
He said: "The Government is looking at options for reforms to ISAs that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission.
This follows a Government call for evidence that concluded on December 12, which explored ways to increase investments in capital markets and encourage more consumers to try investing.
LATEST DEVELOPMENTS:
Some industry experts are calling for an increase to £40,000 to better support long-term financial planning
GETTYLord Livermore added that "the Government keeps all aspects of tax and savings policy under review," suggesting ongoing evaluation of the ISA framework.
Despite the Government's commitment to maintaining the current allowance, some industry experts are calling for an increase to £40,000 to better support long-term financial planning.
Danny Haynes, chief product officer at Kroo Bank, said: "We hope the Chancellor will consider an additional £20,000 allowance for stocks and shares ISAs, providing tax relief of up to £40,000 in total annually.
"This will encourage the public to grow their wealth tax-free in a way that suits them."
Rezaah Ahmad, CEO of investment platform WiseAlpha, echoed this sentiment, arguing that the current limit "was introduced in 2017" and an increase would provide "far more flexibility" for savers to build diverse portfolios.
Labour was recently questioned in Parliament about potential reforms to Lifetime ISAs, which currently provide a 25 per cent bonus on deposits up to £4,000 annually, resulting in a maximum bonus of £1,000.
ISAs are useful tools for those looking save and avoid paying taxGETTYTreasury minister Emma Reynolds was asked about possible changes to the scheme but declined to provide specific details
When discussing the dual purpose of Lifetime ISAs, which can be used for first-home purchases or accessed at age 60, Reynolds highlighted their flexibility.
She said: "You could argue that one of the benefits of the dual purpose is it's very flexible.
"You may have a situation where somebody is using it to purchase a home, that doesn't work out, they could actually use it for a pension later in life."
