Rachel Reeves is considering slashing the hugely popular Cash ISA allowance, or axing it altogether. If the Chancellor goes through with the secret plot, it could spark similar fury to scrapping the winter fuel payment. That hit about 10million pensioners, and attacking the Cash ISA could hurt even more people. Savers hold more than £300billion in the tax-free savings vehicle. Every year, about 12million Britons tuck money away in one.

That’s costing the Treasury billions in lost tax revenues, as Cash ISA savers don’t pay a penny in income tax on their deposits. They don’t even have to mention ISAs on their tax returns. Which is reason enough for Reeves to act. Now she has a second cause and this time she has the backing of greedy City fund managers. They’ve been urging Reeves to slash the Cash ISA allowance because they want savers to invest in Stocks and Shares ISAs instead. And guess who makes big money from Stocks and Shares ISAs?That’s right. City fund managers.

Currently, every adult can save up to £20,000 a year in an ISA, with no restrictions on how much goes into cash or shares.

Reeves is desperate to revive growth and fund managers have got her ear. They’ve sneakily told her that ISA funds could work harder more for the economy if invested in company stocks rather than parked with bank and building societies.

Reports suggest Reeves is open to the idea but savings expert Anna Bowes at The Private Office called the plot “outrageous”.

She said: “Lots of people don’t want to invest in the stock market and the Chancellor shouldn’t force them to do so. It’s a very personal decision.”

Older savers have particular reason to avoid the volatile stock market, as they need a reliable rate of interest to secure their income, she said.

The deadline for using this year’s ISA allowance expires at midnight on April 5, and Bowes said: “With Cash ISAs threatened, it’s now more important to use yours than ever.”

Higher-rate interest rates have driven Cash ISA popularity to new highs, with savers depositing a record £49.8billion in 2024, Bank of England figures show. That beat 2023’s record of £47.1billion.

Mark Hicks, head of active savings at Hargreaves Lansdown, pinned this on higher interest rates and frozen income tax thresholds.

With the Bank of England almost certain to cut interest rates on Thursday, fixed rates look tempting, Hicks added. “Anyone planning to get a cash ISA before the end of the tax year may want to strike sooner rather than later,” he said.

Stocks and Shares ISAs offer the prospect of superior returns over the longer run, with more short-term volatility.

But Cash ISAs are a brilliant product and Reeves would incite fury by scaling it back, Bowes said, adding: “She must think again.”