Chancellor Rachel Reeves is understood to be putting a pause on rumoured reforms to ISAs after widespread backlash from building societies and
In recent months, the Chancellor is reported to have been considering cutting the tax-free allowance attached to the popular savings accounts.
It should be noted that Reeves is not scrapping the plans all together with Government officials telling The Financial Times that there was "differing views" within the Treasury.
The Chancellor is said to be consulting with more stakeholders and Labour ministers on the best way to proceed with the existing regime.
The Chancellor has placed a pause in rumoured ISA reforms
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Next Tuesday (July 15), Reeves is expected to use her Mansion House speech pledge more advice and support to encourage the public to invest in stocks and shares, including in British companies.
Specifically, reports suggest the Chancellor was preparing to confirm a cut to the annual tax-free cash ISA allowance during her speech, as she attempts to move around £300billion held in the product into British companies.
Last month, Treasury officials said Rachel Reeves was exploring a new annual limit for cash ISAs at a much lower level to the current £20,000 threshold.
Building societies have pushed back on this overhaul to ISAs, citing that the products are used to fund home loans and the rumoured reforms could push up mortgage costs.
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ISA reform could be comingGETTY Robin Fieth, the chief executive of trade body Building Societies Association (BSA), warned the Chancellor that changes to cash ISAs are “unlikely to encourage people to invest”.
According to the association, HM Revenue and Customs (HMRC) figures highlight that over 18 million Britons have cash ISAs.
Nearly half of cash ISAs are held by people with incomes of less than £20,000 annually, and the average savings balance is just under £13,400, the BSA said.
A Treasury spokesperson said: "Our ambition is to ensure that people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy."
The decision to not announce cash ISA reforms during next week's Mansion House address will come as a surprise to many figures in the UK financial services industry.
It comes following an extended period of lobbying from asset managers and brokers, who have urged Reeves to consider limiting the tax-free sum linked to ISAs.
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PAConsumer rights groups have pushed back on these plans as they believe reducing the allowance would unlikely change savers' behaviour.
Furthermore, critics have sounded the alarm that there is no guarantee that money raised from reforms will flood into London-listed stocks.
Recently, the Financial Conduct Authority (FCA) proposed new financial rules to assist British savers in getting free "targeted support"/
The regulator wants to permit firms, including investment websites, to make suggestions for people who are sitting on cash which is not being put to use.