MSE News: Savings rates dive, so what next for your cash?

DiggerUK

But with depositors having few alternatives, the banks have what they need. Don't forget, they are awash with QE funds that they are not lending out as well.

As to 2018....a lot can happen in 6 months, let alone 6 years.

Their capitalisation levels are slowly getting reduced anyways with 'Merv and the Coalitioners' saying they would guarantee the banks.
They are on a wing and a prayer that they can keep pulling rabbits out of hats like in 1980, 2007 and.......all our yesterdays, todays, tomorrows, and the days after that.
..._

gadgetmind

grey_gym_sock wrote: »

are you implying that it's improvidence that some ppl don't start saving early?

Their motives are their own concern. The fact is that some save earlier and harder than others, and ISA are just like bank accounts in that the more you put in, the more you have in there. If ISAa are "unfair" then so are bank accounts, and pretty much everything else in the worls!

ppl with large inherited wealth can max out their ISA allowances from the start.

I've been contributing hard to PEPs/ISAs since the last 80s yet my total inheritances to date went on replacing a boiler that died. I also know a couple where both are basic rate tax payers yet they choose to max out their ISAs.

Of course, we could all have sat back, done zero saving, and said that ISAs are "unfair" because we have less saved than others.

it's the income and capital gains made on the capital. ISAs give exemptions for investment income (and capital gains); there are no similar exemptions for earned income. WHY?

What kind of exception did you have in mind?

(also, ISA capital is not always earned. some of it is inherited or from previous investment gains.)

The inherited money will also presumably have been taxed at some point, and gains on gains are part and parcel of sensible investing.

but that's no reason to make them even more complicated unnecessarily.

Nor to tax them IMO.

grey_gym_sock

a fair way to tax income is to have a personal allowance which is exempt from tax, then a band taxed at a certain rate, then another band at a higher rate, and so on. that's all you need. the idea is that ppl should pay a higher percentage tax when they have higher incomes - not to penalize them, but because they can more easily afford it. it's a simple idea.

ISAs depart from that system, and obviously make it more complicated. do they make it any fairer? i say: no.

nobody has given any plausible reason why ISAs make it fairer.

the reason to tax ISAs is to share the tax burden more equitably, by spreading it equally across all investment and earned income, instead of arbitrarily exempting investment income in certain circumstances.