Nigel Farage has lashed out at Rachel Reeves amid reports that the Chancellor will announce plans to slash the annual cash ISA allowance. Ms Reeves reportedly wants to set the annual limit below the £20,000 ceiling savers can take advantage of to shield their individual savings accounts. Mr Farage posted his reaction on X, telling his followers: “Reeves is killing ambition and driving people out of the country.”

The Chancellor is expected to announce the plan to cut the allowance at her Mansion House speech on July 15. Ms Reeves has previously ruled out cutting the overall amount savers can invest in stocks and shares tax-free, but she has not said the same of cash ISAs.

City figures have said that earlier this year, the Government discussed cutting the threshold for the cash ISA as low as £5,000, according to the Financial Times.

The same publication reports that Ms Reeves believes the move would boost the stock market as it encourages savers to shift from cash to stocks and shares. Investment banks and asset managers would be in favour of the change, while building societies use cash savings to make loans. Cash ISA balances account for 39% of all savings balances held by building societies.

Money Saving Expert founder Martin Lewis described the idea as “p*** people off economics”. In a post on X, he said: “Reports [Rachel Reeves] will announce a cut to the cash ISA limit at her July 15 Mansion House speech. If true, I think it’s a mistake. I doubt it’ll substantially nudge people to invest not save; said to be the aim.”

Lewis said he thought it “very likely” to only affect future ISA limits so savers with money in cash ISAs “shouldn’t panic”.

He added that while in favour of encouraging investment in Britain, slashing the allowance wasn’t the route to doing that.

Lewis said: “I’ll be disappointed if the Chancellor chose to listen to the big investment firms in the City, and shut down many building societies and consumer groups who’ve said its not a good route.”

He called for better awareness and personalised guidance to change the way people consider risk, concluding: “But let’s use the carrot not a stick.”

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, said any changes to the ISA regime shouldn’t add friction to transferring money between cash and stocks and shares ISAs.

She added: “Keeping allowances at the same level across cash and investments means that with targeted support, firms will be ideally placed to help people right-size their allocation, based around their financial needs at different times, rather than second-guessing where tax allowances might end up.”

A Treasury official is quoted by the FT as confirming the Government has been examining options to reform ISAs to “get the balance right between cash and equities”.