City of London firms have in recent weeks urged the UK government to scrap, or scale back, cash Isas, the popular savings products that allow consumers to earn interest free of tax.
The Isa, introduced in 1999, has been wildly popular: just under a third of the UK’s population, or 22.3mn people, holds one, with most opting for the cash variant, according to the latest HM Revenue & Customs data, for 2021-22. Some 7.8mn people hold a stocks-and-shares Isa, which allows consumers to invest free of taxes on their returns.
In recent weeks though, the cash Isa has come under fire. Financial services companies including BlackRock, the Phoenix insurance group have met with chancellor Rachel Reeves and told her to cut tax breaks on cash Isas, or do away with the savings products altogether. Fidelity International told the Financial Times that tax reliefs should be limited to £4,000 a year.