ISA review 'could start in weeks' - but will £20,000 tax-free allowance be slashed?

A major review into the future of ISA could be launched within weeks, according to a report. The consultation would look to seek opinions on how can be reformed.

The reports that a Treasury paper could be launched within weeks and potentially at Reeves’ Mansion House speech to City executives in July.

It comes after Labour confirmed in its Spring Statement in March that the Government is "looking at options for reforms" for ISAs - however, nothing has been announced yet.

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A document published after the Spring Statement read as follows: "The Government is looking at options for reforms to Individual Savings Accounts that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission.

"Alongside this, the government is working closely with the Financial Conduct Authority to deliver a system of targeted support to give people the confidence to invest."

A cash ISA is a type of account where you can save up to £20,000 each tax year and any savings interest you make will be tax-free.

Before the Spring Statement, it was reported that the Chancellor could cut the £20,000 tax-free cash ISA limit to just £4,000, in order to encourage more people to invest in the stock market - but again, nothing has yet been confirmed.

In a social media video published earlier this year, explained that even if changes are later announced, it would not impact any money you already have in a cash ISA.

He said: "They're talking about lowering the limit of how much money you could put in in future, so there's no need to panic about your existing cash ISAs if the rumours are correct.

"As for when it starts, well, if it is announced in the Autumn , there's a chance it could start immediately so it would instantly lower your cash ISA allowance.

"Or there's precedent for ISA changes for them doing the change, announcing it in autumn and starting it in the January or starting it in April 2026 – the new tax year."

He added: "For me, what all this means is if you are planning to save into a cash ISA this tax year and you've got the money, getting the money in sooner would seem safer – in case there is a risk of the allowance being cut."

Savers have been more at risk of having to pay tax on interest they've made on their savings after rates improved over the past couple of years. But not everyone has to pay tax on savings interest.

If you're a basic-rate taxpayer, you can earn £1,000 every tax year in savings interest before you need to pay tax. The threshold is £500 for higher-rate taxpayers, while additional rate taxpayers don't get an allowance at all.