Analysts are urging Chancellor Rachel Reeves to consider reform to the ISA reform as part of next week’s Spring Statement despite reports the event is likely to be uneventful.The forthcoming address presents an opportunity for the chancellor to elaborate on Government intentions regarding a replacement for the Lifetime ISA, according to industry experts.Last year saw the announcement that a new ISA product targeting first-time buyers would supersede the existing Lifetime ISA scheme.According to Tom Selby, director of public policy at AJ Bell: “The Spring Statement could be an opportunity for the Chancellor to put some meat on the bones, hoping to show that it is backing first-time buyers alongside its aim to deliver 1.5 million homes this Parliament.”The Treasury faces pressure to safeguard the interests of existing Lifetime ISA holders as it develops its replacement scheme.Mr Selby emphasised that enabling current savers to purchase property using their existing accounts must remain a priority, whilst also ensuring they can move funds to any new product without facing the punitive 6.25 per cent withdrawal charge.He said: “Crucially, the Treasury must consider the best interests of those who currently are investing in a Lifetime ISA when devising a plan.”Those utilising the accounts as a retirement savings vehicle also require clear assurances about the future of their investments, with Mr Selby warning they “must not be disadvantaged by the Government’s decision to replace them”.LATEST DEVELOPMENTSSavers slapped with £641 tax bill as 1.4 MILLION face ‘surprise letter from HMRC’Premium Bonds alert: Savers could flock to ‘risk-free’ NS&I ahead of £20,000 rule changeNationwide to axe free £175 bonus as deadline date confirmed – how YOU can still claimSeparately, the Chancellor’s November announcement of plans to reduce the cash ISA allowance to £12,000 for those under 65 from April 2027 continues to attract scrutiny.The policy aims to encourage more savers to put their money into investments rather than cash holdings. However, Mr Selby expressed scepticism about its effectiveness.He said: “There’s little evidence to suggest the plan will work and Government should instead be focused squarely on simplifying the market to make it easier for ordinary people to navigate, providing flexibility for consumers, rather than adding friction in the form of new allowances and extra complexity.”A Government reversal appears highly improbable, though further details may emerge next week.A central concern for investors remains how HMRC intends to handle cash and similar assets held within stocks and shares ISAs.Mr Selby noted that cash flows through these accounts routinely, whether through contributions, dividend payments, fee deductions, or when selling assets to fund withdrawals.He highlighted legitimate scenarios where investors might temporarily shift to cash, such as parents moving funds out of equities as their children approach university age to protect against market volatility.”If Government took a heavy-handed approach toward investors holding that cash, parents would rightly be furious,” Mr Selby warned, adding that he hoped “common sense prevails and government recognises it doesn’t need a sledgehammer to crack a nut.”
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