Wealthy savers could be set to enjoy tax cuts worth tens of thousands of pounds in ISA reform

The Chancellor could introduce an additional allowance beyond the current £20,000 ISA allowance, for those backing UK equities, the Telegraph reports.

An increase of £10,000 to a £30,000 cap could mean capital gains tax savings of £35,490 over 20 years for a higher rate taxpayer who is investing in stocks and shares.

A £5,000 rise would mean savings of £17,970, according to figures calculated by Hargreaves Lansdown.

Savers do not pay tax on savings interest or capital gains accrued in ISAs.

The capital gains tax-free allowance is currently £6,000 and £3,000 for trusts.

The current capital gains tax rate for other chargeable assets, not including residential property (where the rate is higher), is 30 per cent for higher or additional rate income taxpayers and 10 per cent for basic rate taxpayers.

Lower-rate taxpayers would see £17,970 in savings over 20 years if the ISA allowance was raised to £30,000.

If it were increased to £25,000, the savings would be £8,985.

These calculations by Hargreaves Lansdown assume a six per cent annual return with capital gains being realised on share price gains, rather than dividends.

An HM Treasury spokesperson said: “HMT is receptive to ideas of how we can make ISAs more attractive to encourage people to develop a savings habit and to invest in a way that works for them.”

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Any changes to ISA rules would be announced at a future fiscal event, GB News understands.

Savers can currently put up to £20,000 into ISAs within one tax year.

There are four types of ISA:

• Cash ISAs
• Stocks and shares ISAs
• Innovative finance ISAs
• Lifetime ISAs

Savers can put money into one of each kind each tax year.