Building society ‘inundated’ with worried customers over possible ISA shake-up

The boss of Leeds Building Society said staff have been “inundated” with questions from worried customers over the future of cash ISAs, amid reports the Government could cut the limit on deposits.

Richard Fearon, chief executive of the UK’s fifth largest building society, said it had heard from hundreds of its members who had concerns about the potential overhaul.

Chancellor Rachel Reeves is reported to be considering lowering the limit on how much people can put into cash ISAs per year, down to £4,000 from the current £20,000 ceiling.

Cash ISAs are individual savings accounts through which people can earn interest on savings without being taxed.

Mr Fearon told the PA news agency: “Since all the speculation we have heard from hundreds of our members who are opposed to the changes, who are worried about the prospect of having their choices narrowed, and think it’s unfair to have the tax-free incentives removed.

“Reducing or scrapping cash ISAs will not necessarily create any extra investment in the UK – it’s unlikely to.

“But what it will do is lead to higher tax bills for savers and higher repayments for mortgage holders, so we think it is a bad idea.”

The potential changes to the tax-free savings system would form part of the Government’s efforts to boost investment into the UK – with Ms Reeves saying she wants 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”.

Mr Fearon acknowledged that, of stocks and shares investment, just £1 in every £10 goes into UK companies, with a stamp duty on UK shares acting as a disincentive.

“I’m a huge advocate that we need to get economic growth firing again but it’s about looking at the big picture,” he told PA.

He said there had been “lots of concern and people coming in multiple times a day right across the country” to ask about whether existing ISAs will lose their status, or if they will be forced to move savings into stocks and shares.

The remarks come as Leeds Building Society unveiled its full-year financial results, reporting a record-high level of mortgage lending and savings growth.

The group, which is 150 years old and has about 991,000 members, said first-time buyers had been driving demand for lending and made up almost half of all new mortgages in 2024.

But Mr Fearon said it was “critical” to ramp up house building up across the country to increase the supply of affordable homes on the market.

The building society reported a pre-tax operating profit of £137.5 million for 2024, down from the £181.5 million made the prior year.