UK households have been alerted to a potential "double tax hit" as a Labour government is expected to gain £8.8 billion from savers, according to Coventry Building Society.

Jeremy Cox, head of Strategy at Coventry Building Society, warned: "Savers are facing a double hit. First, frozen tax thresholds are quietly dragging millions into higher tax brackets."

He added: "Now, the potential cut to the cash ISA limit risks punishing those who simply do the right thing by putting money aside. For many - especially the half a million people expected to move into higher-rate tax next year - the blow will be even harder."

Cox explained that with their Personal Savings Allowance slashed in half, savers will either pay more tax on their savings or be pushed toward riskier investments they may not fully understand, reports Birmingham Live.

He stated: "The Treasury may gain billions from these changes, but it's responsible savers who'll end up footing the bill through higher taxes on their hard-earned money."

Cox provided an example: "A basic-rate taxpayer earning £50,000 who receives £1,000 in interest from non-ISA savings would tip over into the higher-rate bracket. This shift halves their Personal Savings Allowance, meaning the remaining £500 of interest is taxed at 40 per cent, costing them £200."

Discussions are ongoing between the government and building societies about possible changes to cash ISA rules. A Treasury spokesperson mentioned, "Our ambition is to ensure people's hard-earned savings are delivering the best returns and driving more investment into the UK economy."

Following reports that changes to the annual cash ISA allowance will not feature in the Chancellor’s upcoming Mansion House speech, Harriet Guevara, Chief Savings Officer at Nottingham Building Society, responded positively: "If reports that the Chancellor will not announce a cut to the annual Cash ISA allowance in her Mansion House speech next week are true, this is positive news for savers and for lenders."

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