The Chancellor has backed down from changing the annual limit on how much you can put into a cash ISA. It was widely expected that the cash limit would be reduced to perhaps as little as £4,000, in order to encourage people – those with funds to salt away tax-free, anyway – to put the balance of their £20,000 annual ISA limit into shares. But in her annual Mansion House speech to the City of London in July, the Chancellor made no mention of restricting the cash limit.

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Her change of heart was probably influenced by a strongly-worded letter from the Building Societies Association which described cash ISAs as “a cornerstone of personal savings for millions” of people. It also warned that restrictions would “disrupt the flow of capital that supports mortgage lending”.

In her speech, however, Reeves did say she recognised “the potential for ISA reforms to improve returns for savers… and I will continue to consider further change to ISAs”.

So cash ISA reform is still clearly on the table, and will be part of discussions with the finance industry before the autumn Budget where any changes would be announced. They are not expected to affect the existing £420 billion in cash ISAs or the £20,000 savings limit this tax year.

All interest on cash ISAs is tax-free. If you have money in cash ISAs you can easily move it to one which pays better rates. The most important rule is not to take the money out. If you do, it will lose its tax-free ISA status. Start by picking your best buy account – you can get 4.4% from trusted names on an easy-access variable-rate account, and aim for 4.25% for a one-year fixed-rate ISA. Open the account and say you will fund it by a transfer. The new ISA provider will send you a transfer form to complete. Make sure you only transfer money from an ISA that will let you do it without penalty: a fixed-term ISA will have to run its course, and a notice account should only be moved at the end of the notice period. New and old providers should keep you informed of progress by email.

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