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

kabayiri

For me, ISAs are part of the issue, where there is a wholesale channelling of money into the City. Our economy is dominated by a bias to the financial engine in the City. I don't think this makes for healthy independent regions.

This is why I choose to put some of my money into a local Credit Union paying an equally derisory rate of return. The CU money is being used in my local economy.

N1AK

michaels wrote: »

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.

Can anyone give a good fairness or economic arguement for keeping the uncapped isa system? Why not just limit the ISA benefit to 10k of savings or £x of tax relief?

ISAs aren't a tax break for the 'rich' unless you believe the rich are households earning around £40-100k.

A wealthy individual earning £500k will be putting a minimal amount of his money into ISAs (in fact I would think it is unlikely they would have a cash ISA). They will have tax arrangements and investments that provide more benefit anyway.

The people who benefit most from ISAs are the middle class who can protect a good proportion of their savings from taxation. This encourages them to save, which protects the state from more social welfare costs if things go wrong and helps them look after themselves and their children.

N1AK

grizzly1911 wrote: »

I haven't changed my stance.

Things aren't as good as they used to be.

I still think low value pension pots, through run of the mill schemes, are engineered more for the benefit of the provider. The "investor" takes the all the risk and pays all the fees.

I agree pretty strongly with Grizzly's position. I am currently paying into a pension scheme. Because of salary sacrifice I pay 4% of my earnings to get 10% of earnings put into a scheme. That increase is enough to, just, make me think it is worth the risk.

The problem with pensions over other investments is you lose masses of flexibility and control. You're reliant on someone else to handle your money. I also have to hope that nothing changes in the next 40 years to make saving in a pension a mistake. Trying to predict the UKs finances in 2050 is impossible, yet that's when I need my pension to pay out.

I'm not planning for any state support in the form of a pension. I'm also saving an additional 15% of income outside of my pension so that should everything go wrong with my pension I can still afford to eat.

Out,_Vile_Jelly

Can I just say that this has been a really enjoyable and well-argued thread.

Surely someone will be along shortly to mention house prices in Aberdeen and the price of silver.

RenovationMan

Out,_Vile_Jelly wrote: »

Can I just say that this has been a really enjoyable and well-argued thread.

Surely someone will be along shortly to mention house prices in Aberdeen and the price of silver.

That's because Graham_devon and his raft of sock puppethaven't been on here. Not a single post by Devon and, tellingly, not a single 'thank' from Devon's THANK username 'rewired'.

Just to reiterate - not a single post on here from Graham_Devon. Not a single 'Thanks' from his sockie, 'rewired'.

Thrugelmir

On reflection. My personal view is the time to remove the tax break is when we are all saving too much. Will be a few years before this happens if at all in my lifetime.

RenovationMan

Thrugelmir wrote: »

On reflection. My personal view is the time to remove the tax break is when we are all saving too much. Will be a few years before this happens if at all in my lifetime.

You're an old cynic, Thrug.

You're also correct.