The SNP has urged Chancellor Rachel Reeves not to cut the tax-free allowance on cash savings accounts amid reports she could announce the controversial measure next week. The move would see the threshold dropped from £20,000 for cash individual savings accounts (Isas), sparking fierce opposition from opposition parties and consumer groups.
Reports of the potential shift have already raised serious concerns among banks and financial experts. Consumer finance champion Martin Lewis warned the decision could prove as unpopular as other Labour policies introduced over the past year, including cuts to personal independence payments (Pip) and the winter fuel payment.
SNP warns of Scottish impact
SNP economy spokesman Dave Doogan said the move could "clobber" 1.3 million people in Scotland who hold cash Isas. He accused Reeves of making the Labour Government "one of the least popular in history" through a series of austerity cuts and tax rises affecting all parts of society.
"Rachel Reeves seems determined to make this Labour Government one of the least popular in history with its austerity cuts and tax hikes hitting every part of society and leaving families worse off," Doogan said. He described the Government as "totally out of touch" with ordinary families struggling with the cost of living.
Savings crisis concerns raised
Doogan warned that under Keir Starmer (Labour), Brexit Britain already suffers from soaring living costs, poor wages and a personal savings crisis. He argued the UK Government should be helping people rather than launching "another Labour Party tax grab" by targeting people's life savings.
"First, the Labour Party went after pensioners and disabled people with their winter fuel and disability cuts, then they went after farmers and small businesses with their tax hikes, and now they are coming after millions of hard-pressed families who are simply doing their best to save for their futures," he said. The SNP spokesman added that people are "sick to the back teeth" of the Labour Government making it harder for families to get by.
Research reveals scale of impact
Research commissioned by the SNP from the House of Commons Library found that 30 per cent of Scottish adults hold a cash Isa. Those accounts had a total market value of £52.7 billion as of April 2022, representing an average of £32,917 per account.
The figures highlight the significant number of savers who could be affected by any reduction in the tax-free allowance threshold. Doogan predicted the blow to savers would prove "deeply unpopular with voters" and could become another major controversy for millions of families already angry with the Labour Government.
The UK Government has been contacted for comment on the reports and the SNP's criticism of the potential policy change.
Note: This article has been edited with the help of Artificial Intelligence.
