Martin Lewis warns millions will 'pay more tax' in Rachel Reeves reform plan

Martin Lewis is warning the 7.9 million cash ISA savers that they will be directly affected by any changes to the tax-free saving system. Although the specifics of the reforms are unclear, Rachel Reeves has confirmed that the government is considering an overhaul of the ISA system to encourage more people to invest rather than save.

Experts speculate that this might result in the £20,000 annual ISA allowance being reduced to as little as £4,000. In his , Martin addressed this concern: "So much current uncertainty, anything could or couldn't happen, at any time."

He also shared some reservations about the effectiveness of this approach, suggesting that out of the 7.9 million cash ISA holders, "many will just keep saving but pay more tax". He reassured that the reforms will not affect any existing savings, only future deposits.

However, with that in mind, Martin urged long-time ISA holders to review their accounts before any reforms are announced or implemented.

He explained that if you've had an ISA for an extended period, you might be in a subpar cash ISA with a very low interest rate.

With the current volatility in the industry, he mentioned that taking such a step "sooner would seem safer".

If you're considering a switch to another cash ISA, the money guru underscored the necessity of adhering to the proper transfer protocols, as it's not akin to merely relocating funds from a standard savings account.

To maintain the tax-free benefits during the transition, one must engage with the new provider and specify the need for a cash transfer. The institutions will then coordinate to ensure your savings retain their tax-exempt status throughout the process.

It should also be noted that people are permitted to hold numerous ISAs with varying financial institutions. But bear in mind, whether it's the present £20,000 limit or a potential future £4,000 cap, these apply collectively to all your ISAs.

Martin went on to explain: "Some people, five years ago put £20,000 in, the next year £20,000, the next year £20,000... you could have them across lots of different cash ISAs."

As for the pending changes to the cash ISA rules, the financial whizz appears just as uncertain as everyone else, remarking: "Whether it'd start immediately, or in January or April 2026, no one knows."