In this week’s Enews, we look at the Chancellor’s confirmation that the ISA allowance won’t be reduced, and recommendations for reforming the Household Support Fund. There is also news on rising borrowing figures potentially leading to tax rises to update you on.

• Chancellor confirms ISA allowance won't be cut
• Household Support Fund 'needs reforming'
• Higher borrowing figures 'increase prospect of tax rises'

Chancellor Rachel Reeves has confirmed that the annual tax-free ISA allowance won’t be reduced from £20,000.

Ms Reeves stated that she ‘absolutely wants to preserve’ the £20,000 tax-free investment people can make every year.

The Chancellor is set to launch a consultation into how the UK ISA market could be overhauled, and did not rule out changes to cash ISAs.

The overall annual savings limit remains at £20,000 for 2024/25 and 2025/26. Investors are allowed to invest in a cash ISA, an investment ISA, an Innovative Finance ISA or a combination of the three, subject to not exceeding the overall annual investment limit.

Investors are able to transfer their investments from a stocks and shares ISA to a cash ISA (or vice versa).

The Chancellor said:

‘I do want people to get better returns on their savings whether that is a pension or their everyday savings. At the moment a lot of money is put into cash or bonds when it could be invested in equities or stock markets and earn a better return from it.'

Internet link: CityAM article

Think tank the Resolution Foundation has stated that the Household Support Fund needs renewing and reforming to ensure it continues to help families through the cost-of-living squeeze.

The Fund has helped millions of families in England with their food, energy and water bills since it was introduced in 2021. However, the Foundation stated that its effectiveness has been 'hampered' by 'chaotic and declining funding'.

It says that funding needs to be put on a 'firmer footing', and urged the government to use the upcoming Spending Review to ensure the long-term future of the Household Support Fund.

Alex Clegg, Economist at the Resolution Foundation, commented:

'The Household Support Fund has been a vitally important scheme, helping millions of families with unexpected costs and rising bills through the pandemic and cost of living crisis.

'But its success has been hampered by chaotic and declining funding, and a lack of public awareness. This risks households in need of urgent help being left unaware and unable to access support.'

Internet link: Resolution Foundation website

Experts have warned that recent higher than anticipated government borrowing figures have increased the prospect of Chancellor Rachel Reeves raising taxes at the next Budget.

Official data showed that government borrowing was £20.2 billion in April, which was an increase of £1 billion from the same month in 2024.

Experts have warned that weaker economic growth anticipated over the coming months could affect tax receipts, which would pile pressure on government finances.

The Chancellor aims to bring stability to the UK economy by paying for day-to-day government costs through tax income rather than borrowing and getting debt falling as a share of national income by the end of the current parliament.

Ruth Gregory, Deputy Chief Economist at Capital Economics, said:

‘With the Prime Minister announcing a partial U-turn on the cut to winter fuel payments, the dilemma faced by the Chancellor over how to deal with increased spending pressures in environment of low economic growth and high interest rates hasn't gone away.’

Internet link: BBC article