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Building society chiefs will this week intensify their protests against the chancellor’s plans to cut cash ISA limits by warning that it will push up borrowing costs for homeowners and businesses.

Sky News has obtained the draft of a letter being circulated by the Building Societies Association (BSA) among its members which will demand that Rachel Reeves abandons a proposed move to slash savers’ annual cash ISA allowance from the existing £20,000 threshold.

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The draft letter, which is expected to be published this week, warns the chancellor that her decision would deter savers, disrupt Labour’s housebuilding ambitions and potentially present an obstacle to economic growth by triggering higher funding costs.

“Cash ISAs are a cornerstone of personal savings for millions across the UK, helping people from all walks of life to build financial resilience and achieve their savings goals,” the draft letter said.

“Beyond their personal benefits, Cash ISAs play a vital role in the broader economy.

“The funds deposited in these accounts support lending, helping to keep mortgages and loans affordable and accessible.

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“Cutting Cash ISA limits would make this funding more scarce which would have the knock-on effect of making loans to households and businesses more expensive and harder to come by.

“This would undermine efforts to stimulate economic growth, including the government’s commitment to delivering 1.5 million new homes.

“Cutting the Cash ISA limit would send a discouraging message to savers, who are sensibly trying to plan for the future and undermine a product that has stood the test of time.”

The chancellor is reportedly preparing to announce a review of cash ISA limits as part of her Mansion House speech next week.

While individual building society bosses have come out publicly to express their opposition to the move, the BSA letter is likely to be viewed with concern by Treasury officials.

The Nationwide is by far Britain’s biggest building society, with the likes of the Coventry, Yorkshire and Skipton also ranking among the sector’s largest players.

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In the draft letter, which is likely to be signed by dozens of building society bosses, the BSA said the chancellor’s proposals “would make the whole ISA regime more complex and make it harder for people to transfer money between cash and investments”.

“Restricting Cash ISAs won’t encourage people to invest, as it won’t suddenly change their appetite to take on risk,” it said.

“We know that barriers to investing are primarily behavioural, therefore building confidence and awareness are far more important.”

The BSA called on Ms Reeves to back “a long-term consumer awareness and information campaign to educate people about the benefits of investing, alongside maintaining strong support for saving”.

“We therefore urge you to affirm your support for Cash ISAs by maintaining the current £20,000 limit.

“Preserving this threshold will enable households to continue building financial security while supporting broader economic stability and growth.”

The BSA declined to comment on Monday on the leaked letter, although one source said the final version was subject to revision.

The Treasury has so far refused to comment on its plans.

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US CLARITY bill could allow Tesla and Meta to evade SEC rules — Senator Warren

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US CLARITY bill could allow Tesla and Meta to evade SEC rules — Senator Warren

US CLARITY bill could allow Tesla and Meta to evade SEC rules — Senator Warren

The legislation to establish crypto market structure is one of three bills the US House of Representatives is expected to consider starting next week.

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What is a wealth tax, how would it work in the UK and where else has one?

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What is a wealth tax, how would it work in the UK and where else has one?

The idea of a wealth tax has raised its head – yet again – as the government attempts to balance its books.

Downing Street refused to rule out a wealth tax after former Labour leader Lord Kinnock told Sky News he thinks the government should introduce one.

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Lord Kinnock calls for ‘wealth tax’

Sir Keir Starmer’s spokesman said: “The prime minister has repeatedly said those with the broadest shoulders should carry the largest burden.”

While there has never been a wealth tax in the UK, the notion was raised under Rishi Sunak after the COVID years – and rejected – and both Harold Wilson’s and James Callaghan’s Labour governments in the 1970s seriously considered implementing one.

Sky News looks at what a wealth tax is, how it could work in the UK, and which countries already have one.

Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer at the launch of the 10-year health plan in east London. Pic: PA
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Will Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer impose a wealth tax? Pic: PA

What is a wealth tax?

A wealth tax is aimed at reducing economic inequality to redistribute wealth and to raise revenue.

It is a direct levy on all, or most of, an individual’s, household’s or business’s total net wealth, rather than their income.

The tax typically includes the total market value of assets, including savings, investments, property and other forms of wealth – minus a person’s debts.

Unlike capital gains tax, which is paid when an asset is sold at a profit, a wealth tax is normally an annual charge based on the value of assets owned, even if they are not sold.

A one-off wealth tax, often used after major crises, could also be an option to raise a substantial amount of revenue in one go.

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Wealth tax would be a ‘mistake’

How could it work in the UK?

Advocates of a UK wealth tax, including Lord Kinnock, have proposed an annual 2% tax on wealth above £10m.

Wealth tax campaign group Tax Justice UK has calculated this would affect about 20,000 people – fewer than 0.04% of the population – and raise £24bn a year.

Because of how few people would pay it, Tax Justice says that would make it easy for HMRC to collect the tax.

The group proposes people self-declare asset values, backed up by a compliance team at HMRC who could have a register of assets.

Which countries have or have had a wealth tax?

In 1990, 12 OECD (Organisation for Economic Co-operation and Development) countries had a net wealth tax, but just four have one now: Colombia, Norway, Spain and Switzerland.

France and Italy levy wealth taxes on selected assets.

Colombia

Since 2023, residents in the South American country are subject to tax on their worldwide wealth, but can exclude the value of their household up to 509m pesos (£92,500).

The tax is progressive, ranging from a 0.5% rate to 1.5% for the most wealthy until next year, then 1% for the wealthiest from 2027.

Bogota in Colombia, which has a wealth tax
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Bogota in Colombia, which has a wealth tax

Norway

There is a 0.525% municipal wealth tax for individuals with net wealth exceeding 1.7m kroner (about £125,000) or 3.52m kroner (£256,000) for spouses.

Norway also has a state wealth tax of 0.475% based on assets exceeding a net capital tax basis of 1.7m kroner (£125,000) or 3.52m kroner (£256,000) for spouses, and 0.575% for net wealth in excess of 20.7m kroner (£1.5m).

Norway has both a municipal and state wealth tax. Pic: Reuters
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Norway has both a municipal and state wealth tax. Pic: Reuters

The maximum combined wealth tax rate is 1.1%.

The Norwegian Labour coalition government also increased dividend tax to 20% in 2023, and with the wealth tax, it prompted about 80 affluent business owners, with an estimated net worth of £40bn, to leave Norway.

Spain

Residents in Spain have to pay a progressive wealth tax on worldwide assets, with a €700,000 (£600,000) tax free allowance per person in most areas and homes up to €300,000 (£250,000) tax exempt.

Madrid in Spain. More than 12,000 multimillionaires have left the country since a wealth tax was increased in 2022. Pic: Reuters
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Madrid in Spain. More than 12,000 multimillionaires have left the country since a wealth tax was increased in 2022. Pic: Reuters

The progressive rate goes from 0.2% for taxable income for assets of €167,129 (£144,000) up to 3.5% for taxable income of €10.6m (£9.146m) and above.

It has been reported that more than 12,000 multimillionaires have left Spain since the government introduced the higher levy at the end of 2022.

Switzerland

All of the country’s cantons (districts) have a net wealth tax based on a person’s taxable net worth – different to total net worth.

Zurich is Switzerland's wealthiest city, and has its own wealth tax, as do other Swiss cantons. Pic: Reuters
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Zurich is Switzerland’s wealthiest city, and has its own wealth tax, as do other Swiss cantons. Pic: Reuters

It takes into account the balance of an individual’s worldwide gross assets, including bank account balances, bonds, shares, life insurances, cars, boats, properties, paintings, jewellery – minus debts.

Switzerland also works on a progressive rate, ranging from 0.3% to 0.5%, with a relatively low starting point at which people are taxed on their wealth, such as 50,000 CHF (£46,200) in several cantons.

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Jingye and Whitehall officials hold talks over British Steel future

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Jingye and Whitehall officials hold talks over British Steel future

The Chinese owner of British Steel has held fresh talks with government officials in a bid to break the impasse over ministers’ determination not to compensate it for seizing control of the company.

Sky News has learnt that executives from Jingye Group met senior civil servants from the Department for Business and Trade (DBT) late last week to discuss ways to resolve the standoff.

Whitehall sources said the talks had been cordial, but that no meaningful progress had been made towards a resolution.

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Jingye wants the government to agree to pay it hundreds of millions of pounds for taking control of British Steel in April – a move triggered by the Chinese group’s preparations for the permanent closure of its blast furnaces in Scunthorpe.

Such a move would have cost thousands of jobs and ended Britain’s centuries-old ability to produce virgin steel.

Jingye had been in talks for months to seek £1bn in state aid to facilitate the Scunthorpe plant’s transition to greener steelmaking, but was offered just half that sum by ministers.

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British Steel has not yet been formally nationalised, although that remains a probable outcome.

Jonathan Reynolds, the business secretary, has previously dismissed the idea of compensating Jingye, saying British Steel’s equity was essentially worthless.

Last month, he met his Chinese counterpart, where the issue of British Steel was discussed between the two governments in person for the first time.

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Inside the UK’s last blast furnaces

Jingye has hired the leading City law firm Linklaters to explore the recovery of hundreds of millions of pounds it invested in the Scunthorpe-based company before the government seized control of it.

News of last week’s meeting comes as British steelmakers face an anxious wait to learn whether their exports to the US face swingeing tariffs as part of US President Donald Trump’s trade war.

Sky News’s economics and data editor, Ed Conway, revealed this week that the UK would miss a White House-imposed deadline to agree a trade deal on steel and aluminium this week.

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Jingye declined to comment, while a spokesman for the Department for Business and Trade said: “We acted quickly to ensure the continued operations of the blast furnaces but recognise that securing British Steel’s long-term future requires private sector investment.

“We have not nationalised British Steel and are working closely with Jingye on options for the future, and we will continue work on determining the best long-term sustainable future for the site.”

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