Rachel Reeves revives her plans to overhaul the Isa funds

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Chancellor Rachel Reeves is looking to use her budget to revive plans for a comprehensive overhaul of the tax-free international investment regime to shift tens of billions of pounds of savings from cash into domestic stocks, as she tries to import a US-style investment culture to Britain.

But Reeves knows that lowering the tax-free limit on cash Internal security services – perhaps halving it from £20,000 to £10,000 a year – will spark a backlash from building societies, who want British businesses to help them defend the changes.

One Reeves ally said: “She wants to see people investing more in UK stocks because it is good for growth and generates better returns for savers.” “But we can’t win this argument alone. Many companies support the idea but never say so.”

Its plan faltered in the summer after intense pressure from building societies, which warned that they were using cash to finance mortgages and that cutting those flows would make home loans more expensive.

At present, British savers have an annual cap of £20,000 on the amount they can shelter from tax in IAS. Cash Isas are by far the most popular product, with an estimated £300bn deposited, followed by stocks and shares Isas.

while Reeves The company has committed to maintaining the overall £20,000 cap, and was looking to lower the cash cap as one of several options, people familiar with the plans said.

City Minister Lucy Rigby said during the Investment Association dinner on Tuesday that savers could double their savings if they chose to invest in the stock market. “We are committed to building a democracy of contribution,” she said.

“A person who has been saving £1,000 in cash in a bank Isa every April since 1999 would now have around £34,000. If they instead invested in stocks and shares, they could now have around £83,000.”

Treasury officials have held meetings with financial services companies in recent weeks to discuss plans to limit the amount that can be placed in cash.

The meetings came after Reeves said in her Mansion House speech in July that she would consider “further changes to Essas” and “engage more widely in the coming months”, in a bid to achieve “better outcomes for both UK savers and the UK economy”.

A person close to the process said the Treasury was considering setting an annual cash limit of £10,000, higher than the £5,000 previously suggested by industry figures.

Reeves’ allies say she wants people to invest more in London’s stock market, which has struggled to attract enough investment in recent years, leading to a drought in corporate stock offerings.

Treasury officials are also considering reviving the Conservatives’ previous plan to create a ‘Britt Isa’, which would have provided an additional £5,000 tax-free allowance for UK shares. The idea was rejected by the Labor government on the grounds that it would complicate the Isa market.

Reeves’ team confirmed that a cut in the cash cap had been considered ahead of the Budget on November 26, but stressed that “a number of options are on the table and no decisions have been made.”

The Treasury said: “Cash savings are important for people looking to set aside cash for a rainy day and we will protect that.

“But the Chancellor has been clear that she wants to get Britain investing again, so British businesses can grow, and British savers who choose to invest can get more in return.”

Supporters of Isa reform – including asset managers and advisers who stand to benefit from companies raising more money via the London Stock Exchange – have claimed that people should not be given a tax break for holding cash when it could be used to support the economy.

But some of the UK’s biggest investment websites, such as Hargreaves Lansdowne, have argued that capping cash allowances could stop people saving and could make it more complicated for people to switch between different types of ISA.

Reeves’ plans would mark the biggest overhaul of the Isa regime since it came into force in 1999 under then-chancellor Gordon Brown.

The government and regulators have already taken several steps to encourage people to invest. The Financial Conduct Authority said earlier this year that firms will be able to provide customers with “targeted support”, including general suggestions, rather than more expensive financial advice.

The government has also announced a campaign, set to launch next year, to raise awareness of the potential benefits of investment for individuals and the wider economy.