People who have an open ISA account warned over new 'limit' under Labour

Ms Reeves called for the introduction of a £500,000 limit on tax-free Isas in an unearthed newspaper column from eight years ago.
-Credit: (Image: Reach Publishing Services Limited)


People who have an open ISA account have been warned over potential changes coming in the Autumn Statement and Budget from Labour Party Chancellor Rachel Reeves. Ms Reeves called for the introduction of a £500,000 limit on tax-free Isas in an unearthed newspaper column from eight years ago.

The move would put an end to so-called “Isa millionaires” who manage to accrue seven-figure balances from the generous schemes. She wrote: “Support for Isas needs overhauling. Currently 60pc of the tax-free return on ISAs goes to the highest 15pc of earners, and the increase in the Isa limit from £7,000 to £15,000 over the past decade has only helped those who can save big sums of money every year.”

The then-rising star of the Labour Party suggested the Government should match “pound for pound the first £100 that each saver puts in an Isa for basic rate taxpayers”. In the now-archived piece she wrote: “We are increasingly seeing a smaller group of wealthier savers using Isas to minimise their tax liabilities in a move away from the Isa’s original purpose of helping a large number of people build a nest egg.”

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Dame Harriett Baldwin, Tory MP and former chairman of the Treasury Select Committee, said a cap on Isas is “exactly the kind of thing” Labour will be considering ahead of the Budget. She told The Telegraph: “I think it’s highly likely that this is something she is thinking about, whether it be a £500,000 cap or even lower.

“These moves undermine saving habits in general and will undermine the long-term resilience and strength of the UK economy.” Sarah Coles, of Hargreaves Lansdown, said: “An attack on Isa tax breaks would severely dent the nation’s ability to save and invest.

“A cap would apply the worst form of retrospective taxation, irreparably damaging the Isa’s reputation as the go-to place to build financial resilience. Second only to premium bonds, the Isa is a savings and investing national treasure which benefits over half of the adult population.”