Healey poised to overturn cut to cash Isa allowance in first budget

Chancellor’s predecessor Rachel Reeves had planned to reduce allowance from £20,000 to £12,000 a year from April

John Healey is to use his first budget to ditch plans to slash the annual cash Isa allowance, the Guardian understands, preferring a carrot rather than a stick to encourage people to invest more in shares.

City experts welcomed news that the chancellor will overturn a decision by his predecessor, Rachel Reeves, to cut the allowance from £20,000 to £12,000 a year from April to get more money flowing into UK company stocks.

The reversal is also likely to be popular with banks, which already face higher taxes in the budget, and building societies, as they rely on deposits to fund loans to households and businesses.