Controversial plans to reform cash ISAs have reportedly been green lit by the Treasury.

Anyone with a cash ISA has been warned over a rule “in case you didn’t know” amid reports of a shake up from Labour Party Chancellor Rachel Reeves. Controversial plans to reform cash ISAs have reportedly been green lit by the Treasury.

Although it had been expected that chancellor Rachel Reeves would announce these changes in Labour’s Spring Statement on 26 March, they will now more likely be revealed later in the year.

Taking to Reddit, one said: “First they came for cash ISAs, I didn’t speak out because I don’t have a cash ISA. How long until they target S&S ISAs?” A second wrote: “o let’s get this right…. high interest rates are supposed to encourage saving so less money is in the economy in order to reduce inflation, many people suffer, including small businesses , reduced investment, unfixed mortgages etc but it’s for the “greater good” (banks raking in huge sums at the expense of us plebs, again, is a lucky coincidence)….

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“and now they’re punishing people and disincentivising saving aswell? huh?” Pointing out a little-known quirk, one said: “Just in case, like me, you didn’t know how the allowance works, it’s PER YEAR. So at the moment you can put £20,000 into an ISA without paying tax. Next year you can put in another £20,000 and still not pay tax.

“And so on until you have hundreds of thousands of pounds in your ISA that isn’t liable for any tax. There are very few people who have enough spare money to save even £6,000 a year every year and if they do, there are probably better places to put it than a cash ISA.”

“It’s the interest that is tax free, not the money itself (I’m sure you know that, just pointing it out to others who might not). So the money itself has already been taxed. But in the usual fashion they like to tax things over and over multiple times. So you start with £25k, pay £5k of it in tax, and then God forbid you should earn £1k in interest tax free,” another typed.

“To make this clearer: S&S ISA’s are tax free. This means any investments you make are also free from capital gains tax if they’re inside that ISA. They’re way better than just tax free interest,” another agreed.

Speaking to reporters last month, the chancellor said: “It’s really important that we support people to save to achieve their aspirations. At the moment, there is a £20,000 limit on what you can put into either cash or equities (ISAs) but we want to get that balance right.

“I do want to create more of a culture in the UK of retail investing like what you have in the United States, to earn better returns for savers.”