Half a million people are facing a £1,080 tax hit (Image: LPETTET via Getty Images)

Half a million people are facing a £1,080 tax hit from HMRC following a rule change. Thousands of savers could be stung with fresh tax charges of up to £1,080 after the Labour Chancellor slashed the Cash ISA allowance from £20,000 down to £12,000.

Some 7.1 million people contributed to a Cash ISA in 2022/23, with more than a quarter saving above the new £12,000 threshold. Of those, nearly 1.5 million were basic-rate taxpayers and 462,000 were higher-rate taxpayers.

Andrew Prosser, Head of Investments at InvestEngine, said: "Our analysis shows that almost 1.5 million basic-rate taxpayers and just under half a million (462,000) higher-rate taxpayers deposited more than £12,000 into their Cash ISA i

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