Hands off our Isas: Readers are raging over Chancellor’s plans and poll shows just 15% would switch to shares

Are your ears ringing like doorbells, Rachel from Accounts? Judging by the response we have had in recent days to our Hands Off Our Cash Isas! campaign, I imagine the answer is a resounding yes. Indeed, more like church bells.

For readers have spoken as one, loudly and clearly: Chancellor, fiddle with our tax-friendly cash Isas at your peril.

Leave them well alone or face yet again the wrath of the nation, already antagonised by your withdrawal of the universal right to winter fuel payments, your savage National Insurance tax raid on businesses and impending inheritance tax hit on pensions. Fiddle no more.

Since the Daily Mail exclusively reported 11 days ago on building society concerns about the unintended consequences of Rachel Reeves overhauling the Isa regime in favour of stocks and shares, readers in their hundreds have bombarded us with their thoughts. A backlash to end all backlashes.

Fearful that cash Isas could be sacrificed at the altar of economic growth (so ‘invest baby invest’ to follow on from this month’s call from the Prime Minister to ‘build baby build’), they urge the Chancellor to keep this friend of the diligent saver intact.

There are no dissenters. They are fully behind Money Mail’s Hands Off Our Cash Isas! campaign, launched seven days ago, although their choice of words is a bit spicier.

‘Keep your sticky mitts off our cash Isas,’ says 75-year-old John Anderson, former head of engineering at Dudley Council in the West Midlands.

Strong words from an individual who is treasurer at his local church in Sedgley and wouldn’t normally say boo to a goose.

‘Hands off,’ says retired accountant Irene Hadley from Margate in Kent. ‘The interest from my cash Isas helps keep me warm and independent.’ Yes, 74-year-old Irene is among the nine million pensioners who last year were told they would no longer receive winter fuel payments.

‘If Ms Reeves gets her grubby hands on our cash Isas, I won’t be investing, for sure,’ says 62-year-old Milly Martin, from Hythe in Kent. ‘Instead, I will withdraw it on the basis that I am not being rewarded for prudence.

Indeed, I will adopt the mantra of 1961 pools winner Viv Nicholson and spend, spend, spend. Then the Government can look after me like they do all the other people who don’t save for their future.’

Controversial words, but I get where Milly is coming from. Governments should encourage the Millys of this world to strive for financial independence in retirement rather than rely upon the state for financial support.

All heartfelt words from John, Irene, and Milly – and there’s plenty more from other readers, as I report below. In summary, readers see cash Isas as a key part of their financial resilience, and they must not be tinkered with. Too right.

For some, they are a dependable savings pot that they can use when financial emergencies come their way – or when the need for a much-needed holiday becomes overwhelming.

For others, it tops up their monthly income, eaten into by the impact of frozen tax thresholds and persistent inflation. Or it is there quietly sitting in the financial background for the day when it is needed to fund care costs.

In total, 18 million people have an estimated £300billion tucked away in cash Isas, with almost half of plans held by people with annual incomes of less than £20,000. 

Currently, eight million savers a year squirrel away money in these plans which ensures all the interest they earn inside them is tax-free. They are used by those of modest means as well as wealthier savers.

‘Cash Isas are a trusted way for millions of people to grow their savings tax-free while helping to make hopes and aspirations possible,’ says Julie-Ann Haines, chief executive of building society Principality. 

‘It is important for people to build financial resilience, especially in such uncertain times. We should be making it easier for people to save, not harder.’

Ms Haines is joined in her support for cash Isas by Chris Irwin, director of savings at Yorkshire Building Society.

Yesterday, he told Money Mail: ‘Our customers have treasured cash Isas since they were introduced by Labour Chancellor of the Exchequer Gordon Brown in 1999. They provide a safe and reliable way to grow savings, making them an important part of any financial strategy.’

So far, Ms Reeves has steadfastly refused to disclose her intentions, despite widespread speculation that changes to cash Isas could be announced as early as next month in her Spring Statement. If not then, in October’s Budget. At worst, the tax-free wrapper could be removed altogether for cash Isas, a hugely controversial move even by Ms Reeves’s standards.

More likely is either a lifetime cap on balances held inside cash Isas – or a curb on how much of the £20,000 annual Isa allowance can be placed on deposit as opposed to invested in stocks and shares. At present, the full £20,000 allowance can be held in a cash Isa.

Last year, ahead of the Budget, Left-wing think tank the Resolution Foundation tore into Isas, describing them as ‘poorly targeted’, ‘costly’ (in terms of the tax lost to the Treasury) and ‘ineffective’ at raising long-term finance through investing.

It went on to reiterate a previous call to impose a £100,000 lifetime cap on Isas (not just cash Isas). Alarmingly, Torsten Bell, the former boss of this think tank, is now a Treasury minister and could well be bending Ms Reeves’s ear as you read this article.

Yorkshire’s Irwin warns that any restriction on cash Isas would have a ‘detrimental’ impact on the ‘financial wellbeing of many’, also exposing them to tax on more of their savings. Currently, the annual personal savings allowance protects £1,000 and £500 of savings interest from tax for basic- and higher-rate taxpayers respectively. But the allowances have been frozen at these amounts since 2016.

Irwin’s view gets short shrift from the investment industry. It would love to see Ms Reeves give Isas a greater investment bent – with Andy Briggs, chief executive of giant pensions firm Phoenix, stating that the ‘State should not be giving a tax break for us all to park our money in cash’.

Although Mr Briggs and his investment colleagues may have the ear of the Chancellor, they face fierce opposition from cash Isa savers. A survey by pollster Find Out Now, and exclusively given to Money Mail, shows widespread hostility among cash-only Isa savers to any move to nudge them towards investment Isas.

Of those polled who hold only a cash Isa, 47 pc said they would not put money into a stocks-and-shares Isa to make up for any curb in the amount they normally put into cash. This compares to just 15 pc who would.

Tyron Surmon, head of research at Find Out Now, says the results ‘are contrary to what the City and the Government might want to hear’.

The poll echoes what Money Mail readers have said in response to our Hands Off Our Cash Isas! campaign. Most see cash Isas as a key part of their financial armoury – and don’t want it diminished by Ms Reeves.

Among them is 68-year-old Anne Wilkinson, who lives near Barnard Castle in County Durham with husband Ian, two years her senior. Both are retired and love to travel to South Africa – Ian, a former police forensic area manager, was born in Zimbabwe.

Mrs Wilkinson, who worked in the tourist information office at Barnard Castle, says it is ‘rare’ for her to contact a newspaper about anything. But Money Mail’s campaign on cash Isas stung her into action.

‘We’re not against investing,’ she adds, ‘and we have some investments ourselves which we hold outside of an Isa. But at our time of life, putting money into a stocks-and-shares Isa doesn’t make sense.

‘It’s time in the market that counts, and time is rather against us. In contrast, cash inside an Isa provides us with security of our capital, plus an income stream that we can use to support our lifestyle.’

She says she would be ‘extremely cross’ if the annual allowance for cash Isas was reduced. She adds: ‘With my cash Isa, I always know exactly how much I have in my account and, crucially, how much I can draw out in an emergency.

‘But if this money was held in a stocks-and-shares Isa, I would have to hope that if I needed it in a hurry it wouldn’t coincide with a market crash that left my plan in bits.’

She also takes aim at Mr Briggs for failing to acknowledge the role of cash Isas in the wider economy – with the money from such savings used by banks and building societies especially to provide both finance to growing and start-up businesses and mortgages to house buyers.

It’s exactly the point that the head of the Building Societies Association (BSA) made in a letter to the Chancellor earlier this month. BSA chief executive Robin Fieth warned that any curtailment of cash Isas could result in a mortgage crisis and push up loan costs.

Tracey Wilcox, 61, from Nuneaton in Warwickshire, relies on her cash Isas to top up her income from a small pension and a part-time job as an administrator for a mortgage adviser.

She says: ‘At my age, I don’t want to be investing and worrying all the time that I may lose some of my capital. So it’s a big “no” to investing and a big “no” to stocks-and-shares Isas. In my life, financial certainty is all-important, so cash will always be king.’

Ms Wilcox recently transferred a cash Isa to Coventry Building Society, which will pay her 4.5 per cent fixed until May 2026. ‘My capital is safe,’ she says, ‘and I know the exact amount of interest that I will get. It ticks all my financial boxes.’

She adds that any attack on cash Isas by the Chancellor would prove to be a ‘terrible own goal’ – and confirm that

Ms Reeves ‘doesn’t understand the financial needs of most working and retired people’.

‘I’m afraid Rachel Reeves is utterly clueless and out of her depth,’ she concludes. It’s not an isolated view.

John Anderson, who urges the Chancellor to keep her ‘sticky mitts off our cash Isas’, says that at his time of life, he needs his savings to be secure and ‘not subject to the rigours of the stock market’. He recently took out a one-year fixed-rate cash Isa with local building society West Brom at an interest rate of 4.8 per cent.

Mr Anderson, who is married to Susan, also says any curb on cash Isas would represent the ‘last financial straw’ for his 94-year-old mother-in-law, Peggy Lowe, who lives nearby.

‘She is already being hammered from all directions,’ he says. ‘Her state pension is being taxed and she has just been stripped of the winter fuel payment. Peggy’s cash Isa represents her emergency money – and is there just in case she needs care in the future. Cash Isas should be sacrosanct.’

Funding future care is the main reason why Linda and Tom Kilbourn, from Margate in Kent, contribute every year to cash Isas with building society Nationwide.

‘We’re both fit and healthy,’ says Mrs Kilbourn, 77, who goes to dance classes three times a week with friends. ‘But there will come a time when maybe one of us will need care, preferably at home rather than in a nursing home.’

She adds: ‘Our cash Isas, which we try to contribute to every year, will be essential in funding that care. In earmarking these savings for any care we may need, we won’t become a burden on the state.

‘Both my husband and I worked from the age of 15. We’ve paid our dues, while assiduously putting money aside from our taxed income to ensure financial comfort in our later years. We can’t risk what we have saved, so doing anything detrimental to cash Isas would be a big betrayal. Hands off our cash Isas.’

John and Valerie Bate, from Epping, Essex, are avid users of the annual cash Isa allowance – and have accounts with a number of financial institutions including Marcus (Goldman Sachs), Castle Trust Bank and Aldermore. ‘We like to spread our Isa money around,’ says Mr Bate, 71, who before retiring ran his own electrical contracting business, ‘and tend to go for online cash Isas which usually offer the best rates.

‘The current Isa regime offers a choice between saving and investing – or a bit of both – and it works. The Government must not get rid of the cash option. It would represent an awful mistake.’

The last word goes to Susan Sworn, from Wimbledon, south-west London. Although the 64-year-old spent a big chunk of her career working in the City as a fund analyst, she is a big advocate for cash Isas. She says: ‘Cash Isas incentivise individuals and families to save for future events and contingencies, some anticipated, others unexpected.

‘People know that if they save across a range of providers, their capital will not be at risk. This provides a feeling of financial security in an increasingly insecure world.

‘Most people working in the private sector are already exposed to enough stock market risk through their pensions. They simply aren’t comfortable taking on any more with an Isa. That’s why cash Isas should not be touched.’

Yesterday, for the third time in the space of 11 days, we asked the Treasury whether Ms Reeves was minded to curb cash Isas. Rather than use the opportunity to provide comfort to millions of diligent savers by stating that cash Isas are safe under Labour, it chose (again) to sit on the fence. 

It said: ‘We want to help people save for their future goals and build greater financial resilience across the country. We keep all aspects of savings policy under review.’

How contemptible. Hands off our cash Isas!

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