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2mo ago

UK Plans £10,000 Cash ISA Cap as It Weighs Lifetime ISA Overhaul

HM Treasury will respond to ISA reform proposals before the Autumn Budget to steer savers toward equity investments.

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Dame Meg Hillier, who chairs the Commons Treasury committee, says the Lisa needs to be reformed
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Overview

  • New Financial has proposed keeping the £20,000 annual ISA limit but capping cash ISA subscriptions at £10,000 and mandating that any excess be invested in UK equities.
  • The Treasury Select Committee warned that Lifetime ISAs’ dual‐purpose design is overly complex, risks mis‐selling, and counts savings against Universal Credit and housing benefit eligibility.
  • Official data shows 99,650 unauthorised Lifetime ISA withdrawals in 2023-24 compared with 56,900 used for home purchases, suggesting the scheme may not meet its objectives.
  • Building society chiefs and consumer advocates caution that capping cash ISAs could hurt older or risk-averse savers who depend on low-risk interest income.
  • No legislative changes have been confirmed, and HM Treasury’s final response to the consultation will be issued ahead of the Autumn Budget.