Scrap ISAs as most of the tax benefit goes to the rich?

Mikeyorks

michaels wrote: »

I bet if you looked at who benefits most from this tax break you would find it strongly correlated with those who have both the most assets and the largest incomes.

The cash ISA limit is £5640 this year. The average reward is circa the 3% region. So the interest for a year is £169 and the 'tax break' on that adds up to the princely sum of £33.84.

If you're 'affluent' ....... will that be a determining factor in what you do with your cash? The couple of truly 'rich' people I know couldn't tell you what the ISA limits are. As the rewards are so puny they wouldn't contemplate an investment under 6 figures.

heathcote123

michaels wrote: »

Sorry, no VI piece to quote, just my own musings.
I can see the country benefits if everyone puts aside some savings for a rainy day (unemployment, sickness, unexpected cost) but beyond having a cushion, ISAs merely act as a tax shelter for those rich enough to have large savings...by definition the rich.

ISA's aren't really for the rich.. its only 5k a year or so you can put in them isn't it?

Even then the returns the last few years have probably been lower than inflation.

Edit: must remember to read full thread before posting...

heathcote123

Generali wrote: »

I think ISAs should be scrapped as there is no good reason for people to pay tax on their savings when they already paid income tax on the money they saved!

Doubly so if incompetent govt are devaluing the cash as fast as they can.

heathcote123

Kennyboy66 wrote: »

The estimate (in 2010) was that 70% of the cost of tax relief for pensions and ISA went to people earning more than £50k.

There seems even less justification for share ISA (inappropriate for probably the poorest 50% of society), there is no benefit on dividends for basic rate tax payers, so the only benefit is for higher rate taxpayers who have accumulated huge pots over the decades and can escape CGT.

Mmmm - I wonder why this government of multi- millionaires are so keen to keep it.

The poorest in society get tons of benefits. Their entire existence is thanks to the taxpayers that you want to deny a derisory £30 tax break.

I'd be quite happy to see it go really, but not for the 'fairness' reasons the OP is spouting on about. Just as a matter of tax simplification and transparency.

Fella

Kennyboy66 wrote: »

Mmmm - I wonder why this government of multi- millionaires are so keen to keep it.

Don't make me laugh. As opposed to the previous Govt of multi-millionaires? Lying warmonger Blair earning fortunes courtesy of his US & middle-east fanbase? Lowlife Mendelson whos earnings have never been explained but who's wealth is undeniable? Or scumbag Brown copping huge cheques on the after-dinner circuit whilst simultaneously writing his memoirs - all the time on the taxpayer's "dime" as he collects his fat MPs fee despite almost never being seen anywhere near Westminster since he got booted out of No 10.

Hate all MPs by all means but pur-lease don't try to con anyone that the current lot are any worse than the absolute filth they replaced. And at least this lot might sort the economy out.

nearlyrich

So people like me who are saving to be self sufficient in retirement whilst paying 40% tax and tax on our company cars ( which is after all a tool of my trade) should not get the one tax break we currently get?

OK I will spend all my money and become another dependant on the state in my later years...I never benefited from tax credits and subsidised child care either!

Thrugelmir

Kennyboy66 wrote: »

The estimate (in 2010) was that 70% of the cost of tax relief for pensions went to people earning more than £50k.

Seems logical given that would be making higher contributions.

Saving into pension schemes has been in decline for many years. As property became a better home to save for retirement. (or so people believed).

heathcote123

nearlyrich wrote: »

So people like me who are saving to be self sufficient in retirement whilst paying 40% tax and tax on our company cars ( which is after all a tool of my trade) should not get the one tax break we currently get?

OK I will spend all my money and become another dependant on the state in my later years...I never benefited from tax credits and subsidised child care either!

Don't feel so hard done by - the poorest in society will get a £500 cash benefit cap soon. We're all doing our bit.

ILW

Would it be possible to substitute the word "rich" with "successful"?

Thrugelmir

ILW wrote: »

Would it be possible to substitute the word "rich" with "successful"?

Or just prudent.

Or of presbyterian beliefs.

Maybe thrift is the new fashion. Debt is yesterdays.