Martin Lewis confirms new Cash ISA rule as £20,000 limit at risk | Personal Finance | Finance

Money expert Martin Lewis has confirmed a new Cash ISA rule in the face of rumoured cut to annual deposit limits which could be announced as early as next week.

The Money Saving Expert founder has taken to his Twitter to confirm the information he’s had from government on Cash ISAs over what will happen to current ISA deposits if the rules are changed. There have been heavy rumours for months that Cash ISA limits will be cut from their current £20,000 annual deposit limit, with suggestions they could drop as low as £4,000 a year. At the same time, the government is expected to leave Stocks & Shares ISA limits where they are, in order to encourage savers to invest.

Worried savers were concerned about what would happen to money they have already saved, in the wake of a cut to limits. Some ISA users have £100,000s in their Cash ISAs, having maxed out the limits year after year.

But Martin Lewis has moved to quiet concerns as he said any rule changes would not affect existing deposits.

Martin tweeted: “CASH ISAs. While it’s never really been in doubt, as people ask me, I’ve now had 100% confirmation from Govt that “retrospective changes would not be considered under any scenario.”

“Ie any money in cash ISAs before any possible limit change won’t be impacted.”

But Martin has not had confirmation over whether the cut is definitely going ahead, just that it is ‘likely’.

He added: “No. I’m now pretty sure the Cash ISA cut if it happens – and it’s still likely on balance of probability, but I’m less convinced than I was – won’t be to £4,000 (that was a proposal by a finance firm). I suspect it’ll be more like down to £10,000 or £15,000.”

Martin told his followers that he has made his own recommendations to the government about what it should do instead of cutting Cash ISAs, centred around a ‘starter investment ISA’.

He said: “The suggestion I’ve made to the govt instead of cutting cash ISA limit… launch a “starter investment ISA.”

“The thought behind cutting the cash ISA allowance is to encourage, especially younger people, to invest instead via stocks & shares ISAs (which in the long run is likely to be better for them and the economy).

“I think it’s unlikely to work, if people want savings, they want savings. It’s also unfair to deny older people, who have to be more risk averse when trying to nudge younger people. As the govt has repeatedly said none of this is about raising revenue, I’ve suggested an alternative concept…

When will Cash ISA limit change be announced?

“Launch a new “Starter Investment ISA” you can put say up to £1,000 in (whether lump sum or dripped in monthly) and as well as it being tax-free you’ll get for example a 5% boost on contributions from from State (with the cost split between investment providers and the state) as long the money is kept in investments for a set time (eg 1yr).”

Any changes to Cash ISAs, if they do happen, are likely to be announced on Tuesday, July 15 at Chancellor Rachel Reeves’ Mansion House speech.