Companies, including BlackRock and Phoenix Group, have urged Chancellor Rachel Reeves to either scrap or significantly reduce tax breaks on these accounts. Fidelity International proposes reducing the Cash Isa annual allowance to £4,000.

Their rationale centres on fostering a stronger investment culture and bolstering the UK’s equity markets. They argue that the current system disproportionately favours cash savings over stock market investments.

However, consumers have reacted angrily, highlighting the importance of cash ISAs for their financial stability, valuing the accounts’ low volatility and easy access to funds, particularly in uncertain economic times.

Introduced in 1999, ISAs have become a mainstay of UK savings, with 22.3 million people holding them in 2021-22. While stock and shares ISAs are also popular, cash ISAs remain the dominant choice.

Notably, despite their popularity, the number of individuals contributing to cash ISAs has declined by over a third since 2008-09, reaching 7.9 million in 2022-23. This proposed reform would represent the most significant alteration to the UK’s tax-free savings market since the ISA’s inception.