Money expert Martin Lewis has addressed the rumours swirling around Rachel Revees and the cuts to Cash ISA limits she could be planning this year. Martin returned on the latest episode of The Martin Lewis Money Show Live on Tuesday, March 18 for a new tax year special in which he took his viewers through various changes coming in April.
During the episode, Martin was asked by a member of his audience, Debbie, about what to do now to protect your Cash ISA from the Chancellor’s rumoured tax raid. It comes after widespread reports, not refuted by the government, that the Chancellor is considering cutting the limits on the tax-free savings accounts down from the current £20,000 limit all the way to £4,000.
Debbie asked Martin: “Rachel Reeves is on about taxing Cash ISAs which are currently tax-free. Is she also on about minimising it to £4,000 instead of £20,000 a year? If that’s the case, what is the best thing to save in to protect your interest from tax?”
Martin then replied: “I haven’t heard anything about taxing Cash ISAs.
“The only rumour I’ve heard is about dropping the future allowance from £20,000 to £4,000.
“Apparently it’s not coming in the Spring Statement, I don’t have that confirmed, that’s other people’s reports.
“But it might come in the Autumn Budget, it’s still being considered no decision’s been made.”
Martin then said that although this isn’t confirmed, he wanted to make it ‘plain for everyone’ that you should not be pulling money out of your ISA.
He continued: “Now if that’s right, and I haven’t spoken to the Chancellor on this so I don’t know, I just know everything I’ve read on it, let’s just make it plain for everyone. Some people say ‘take your money out of Cash ISAs’, that would be bonkers. Bonkers.
“What it would mean is, you could put £20,000 in this year, you could put £20,000 in next year if she doesn’t drop it on April 6 and now you’ve got £40,000 but maybe the year after, I can only put £4,000 in. So I’ve only got £44,000 protected. Wouldn’t take money out of those! They’re still protected.
“I think it would be very unlikely that they’d change that. The rumour is talking about being able to put less in Cash ISAs in future in order to try to encourage people to invest.
“I don’t think that will work because people who want to save want to save and people who want to invest are different.
“So I think it’s false equivalence but if they do it they’re talking about lowering the amount you can put in a Cash ISA – so don’t let that stop you putting money in a Cash ISA now, in fact you should be putting more in a Cash ISA.”
The Martin Lewis Money Show Live March 19 episode is still available to watch on catchup service ITVX.
