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Advisers attack ‘ridiculous’ suggestion to cap Isas at £100k

Reports this week suggested the idea of a cap has been explored to tackle growing number of “Isa millionaires”.

Advisers have attacked the “ridiculous” suggestion the Treasury could “clobber” savers by capping the total amount an individual can hold in an Isa at £100,000.

Treasury officials have reportedly explored ways to tackle the growing number of “Isa millionaires” with the financial services industry, with one suggestion of a cap as low as £100,000.

The current annual Isa limit is £11,520 for 2013/14, half of which can be held in cash and half in investments.

It is estimated those holding more than £100,000 equate to around 2 per cent of investment Isa savers.

Hargreaves Lansdown figures show if someone saved every year since 1999, when Isas were introduced, they would have invested £124,080.

Personal equity plans were introduced in 1987 so if someone saved into both an Isa and Peps then they could have invested £218,280.

Hargreaves Lansdown head of advice Danny Cox says: “Saving more than £100,000 is very straightforward. One of Isas’ key successes is that Government has not fiddled with the rules and kept them stable.”

Informed Choice managing director Martin Bamford says: “Any move to limit Isa savings would discourage people from saving for the future, which is a ridiculous thing for the Government to do.”

Former Conservative minister and investment author Lord John Lee says it would be “absolutely outrageous” if any cap applied to existing Isas retrospectively.

He says: “It would also be a pity for new investors. We should surely be doing everything possible to encourage savings and investment rather than limiting it.

“It would also seem somewhat bizarre having just allowed Aim shares to be eligible for Isas to now go in the opposite direction and clobber Isa savers.”

The Treasury denies it is actively considering changes to the Isa regime.

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