The biggest shake-up to Isas since they were launched in 1999 is on the horizon. 

Rachel Reeves is set to launch a review of the Isa market within weeks. 

The Treasury is preparing to begin a consultation to seek views from across the City on how Isas could be reformed.

It comes as the Government wants encourage savers to funnel more money into stocks and shares Isas instead of holding large sums in cash Isas.

Three in five people who have more than £10,000 in 'investible assets' hold at least 75 per cent these assets in cash, rather than investments, according to figures from the Financial Conduct Authority.

In the Spring Statement, the Government said it wanted to 'get the balance right between cash and equities to earn better returns for savers' and 'boost the culture of retail investment'

Reforms suggested included a cut to the current £20,000 allowance for cash Isas, an allowance which is currently shared with stocks and shares versions, with a £4,000 limit speculated in recent months.

The Isa consultation could be launched at the Chancellor's Mansion House speech in July. 

This is Money asked five financial experts what changes to Isas could emerge as a result of it - from whether the allowance could be cut to whether stocks and shares and cash Isas will be merged. 

Complex investment route not ideal 

Andrew Hagger, founder of personal finance website Money Comms says: It looks like there could be a big shake-up in the Isa market, far more than just tinkering around the edges.

Investment firms are pushing hard to increase the amount UK consumers put into equity products rather than cash - hence the previously mooted much lower £4,000 cash Isa limit.

The Isa market is currently too complicated, particularly the stocks and share element where performance and charges can vary widely from provider to provider.

There needs to be simplification and potentially new products, perhaps where you could invest cash and equities in a single Isa product.

Reeves and the City Institutions have their sights on a bigger slice of the Isa pie and to shift the focus away from cash.

The reduction of annual cash Isa limits is no doubt seen as one way of achieving this, but trying to force consumers down the riskier and complex investment route isn't the way to go.

Cash and investing in one flexible account? 

Rachael Griffin, tax and financial planning expert at wealth manager Quilter, says: One proposal reportedly being considered is to reduce the cash Isa allowance to £8,000 while keeping the overall £20,000 limit intact. 

Although few savers use the full allowance, cutting the cash limit introduces complexity, particularly when transferring Isas, and is unlikely to encourage a shift toward investing. 

Capping the allowance may end up alienating savers rather than nudging them toward investments

There is also speculation that the Government could require a portion of stocks and shares Isa holdings to be invested in UK-listed companies. 

This is a return to the idea of British Isa, which was rightly scrapped. 

While the idea of supporting domestic businesses is politically appealing, UK investors already tend to favour homegrown assets. 

A rigid allocation could reduce consumer choice and potentially conflict with regulations that require products to be suitable for individual needs. 

Incentives and education are more likely to drive investment flows than restrictions.

One reform that may gain traction is the idea of combining cash and stocks and shares Isas into a single, flexible account. 

This would simplify the current patchwork of products, making it easier for consumers to manage their savings and investments in one place. 

It could also encourage more cautious savers to dip their toe into investing, while still retaining some cash for stability. However, the Lifetime Isa should not be subsumed into this.

Reducing complexity is key 

Michael Summersgill, chief executive of stockbroker AJ Bell, says: The key to unlocking that investment has to involve simplification. 

Gimmicks like the ill-fated UK Isa, rightly kiboshed by the chancellor, often sound like an attractive political soundbite. But they're destined to fail. 

Trying to corral consumers into UK investments by introducing new products, restricting cash Isa limits or introducing mandatory investment quotas will only add complexity and leave consumers lost in an increasingly complex web of saving and investing rules.

Reducing complexity and simplifying consumer choice by merging cash Isas and stocks and shares Isas into a single account would create a more fluid landscape in which providers could combine the benefits of cash saving and investing with a single product wrapper.

The current Isa framework labels people either as a cash saver or an investor. In reality, however, most people need a bit of both – cash savings for a rainy day and long-term investments for future growth.

Should be made easier to switch 

Sarah Coles, head of personal finance at stockbroker Hargreaves Lansdown, says: Nothing is set in stone yet, it's why the Government is talking to a range of stakeholders ahead of the consultation. 

Changes to the framework should be focused on simplicity, rather than cutting allowances and adding complexity. 

We don't believe cutting the cash Isa would drive people to investing as the barriers are behavioural. 

The stocks and shares Isa should be renamed the Investment Isa for simplicity and to reflect modern investment options like ETFs. 

It should be easier for people to switch between cash and stocks and shares Isas when they're offered by a single provider. 

Build confidence in investing 

Brian Byrnes, head of personal finance at money app Moneybox, says: The anticipated Treasury consultation offers a much-needed opportunity to clarify the Government's objectives — whether that's encouraging long-term investing, boosting UK asset ownership, simplifying the Isa system, or reassessing the current £20,000 allowance.

Some proposals — such as reducing the cash Isa allowance to push more savers toward stocks and shares Isas — risk missing the mark. 

While we understand the intent, this approach could undermine a trusted and widely used product. 

Cash Isas remain the UK's most popular savings vehicle and are a vital tool for financial resilience, particularly among lower earners. 

Reform should aim to build confidence in investing, not restrict access to saving.

Ultimately, Isa reform must be part of a long-term strategy to grow a stronger savings and investment culture in the UK. 

That starts with clarity of purpose — and a commitment to keeping consumer needs at the heart of any changes.