It is rumoured that Chancellor Rachel Reeves is cutting the tax-free allowance from its current level of £20,000 to £10,000 in the upcoming Autumn Budget.
This has been criticised by mortgage industry executives, who said it would raise the cost of funding for lenders and lead to more expensive mortgages.
Yorkshire Building Society said in its submission that cash ISAs have “long been a cornerstone of personal savings in the UK, providing a tax-efficient encouragement for individuals to save”.
It continued: “Simply changing the cash ISA limit is unlikely to result in more people investing, but it will hurt people who are responsibly saving for short-term goals, when investing is not appropriate.
“Cash ISA deposits underpin the UK mortgage market and represent a direct investment in the UK economy.”
Mind the affordability gap
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The mutual added that the government should do more to support homeownership, such as stamp duty incentives for downsizing and a new scheme for first-time buyers that is similar to Help to Buy.
Susan Allen (pictured), chief executive of Yorkshire Building Society, said: “As a mutual, our members come first, whether that’s giving them a better return on their savings, helping them overcome challenges with buying a home or standing up for the things that they care about.
“We want the government to keep the £20,000 cash ISA allowance, because it offers our members a fair, tax-free return on shorter-term savings. It gives them a safe and stable way to grow savings while supporting mortgage lending and strengthening the UK economy.”
She continued: “We also want the government to step up support for aspiring homeowners, especially first-time buyers, and do more to make the housing market work better for buyers, renters and landlords.
“As a building society, making good homes possible for more people is a key part of why we’re here. We’re asking the government to support what we’re doing to overcome affordability challenges, like being as flexible as we can in our lending and cutting the need to save for a large deposit with our £5k Deposit Mortgage.”
