Cash Isa Petition

MoneySaverLog

Or catch up with subscriptions missed in previous tax years by doubling the allowance to allow a person to add to which ever element they so wish.

I don't want a S&S ISA it's too risky. I prefer cash, why should I end up being penalised, losing half my allowance every year, for choosing the safer cash option?

grey_gym_sock

innovate wrote: »

I am also no longer so sure of the "cost" argument. The Treasury is, obviously, quite happy for people to have up to £11,260 per person [in this FY] outside of tax-generating savings accounts. Why should they then care in which sort of ISA people keep their money? Where's the extra cost coming into it?

for most ppl, who are basic rate tax payers and don't pay any CGT, there is no tax saving with a S&S ISA, but there is a tax saving with a cash ISA.

for higher-rate tax payers, there is a greater tax saving with cash ISAs than with S&S ISAs. 40% tax saved on interest in a cash ISA. 25% tax saved on the actual dividends received in a S&S ISA.

clearly it would cost something to increase the cash ISA allowance. it should be costed, and you should explain how it's going to be paid for. simple.

MoneySaverLog wrote: »

Or catch up with subscriptions missed in previous tax years by doubling the allowance to allow a person to add to which ever element they so wish.

which would cost yet more. how is it going to be paid for?

I don't want a S&S ISA it's too risky. I prefer cash, why should I end up being penalised, losing half my allowance every year, for choosing the safer cash option?

you are not being penalised. you have never had the right to put the full ISA allowance in cash. you're just pulling "rights" out of thin air.

MoneySaverLog

grey_gym_sock wrote: »

you are not being penalised. you have never had the right to put the full ISA allowance in cash. you're just pulling "rights" out of thin air.

That may be the current case but a ISA allowance is a ISA allowance, as such the ISA allowance (not just £5640 but £11,280) should be able to be invested in whatever you like, cash or S&S You can at the moment put the lot into S&S, just not the other way round. Madness

dunstonh

I don't want a S&S ISA it's too risky. I prefer cash, why should I end up being penalised, losing half my allowance every year, for choosing the safer cash option?

You are not being penalised. Just because S&S ISAs have a higher contribution amount because they are less of a burden on the treasury and help the economy does not mean cash ISAs are penalised as they have a lower limit.

That may be the current case but a ISA allowance is a ISA allowance

One of the mistakes of ISA was calling the investment option AND the cash option ISA. Had they kept their two separate names then you would not be arguing for this.

as such the ISA allowance (not just £5640 but £11,280) should be able to be invested in whatever you like

And who is going to pay for the extra £2 billion a year cost?

MoneySaverLog

dunstonh wrote: »

And who is going to pay for the extra £2 billion a year cost?

The same people who are flooding the banks with cheap money, through "funding for lending" scheme that will release £80 billion to banks and building societies over the next 18 months.

This decreases saving rates and strangely increases lending rates where the BOE rate has been stuck at 0.5% for 3.5 years.

innovate

dunstonh wrote: »

And who is going to pay for the extra £2 billion a year cost?

Not saying this number is wrong - but how do you calculate that?

From what I understand, the only cost to the Treasury would be the tax they couldn't take from savings that some people, if they were allowed to do so, might want to hold in their cash ISAs rather than in their normal savings account.

Assuming a basic rate tax payer, and a generous 3% AER on £5,640, the Treasury would make about £34 a year from this taxpayer's normal savings. If we had 10m basic rate tax payers putting their extra £5,640 into a cash ISA this year, that would be £340m lost revenue for the Treasury this year. Even if it was 10m higher rate tax payers, we'd still only be at a max of £680m - less than half the £2bn dunstonh mentions.

As has been pointed out by others in this thread, there are probably not too many people who can really afford to put £11,280 away each year. So 10m (out of the current approx 26m taxpayers) seems a very generous number to assume.

Also, these numbers don't take into account that some or all of the people who would switch to a cash ISA would probably have their money in an S&S ISA at the outset, rather than in a normal savings account. So the Treasury wouldn't see the tax revenue anyway.

Add another very generous million for the HMRC to update the relevant parts of their website.

So where's the other £1,320m - £1,660m of cost coming from?

dunstonh

Not saying this number is wrong - but how do you calculate that?

HMRC publish the figures.

innovate

Have you got a link pls?

StevieJ

Paul_Herring wrote: »

When are people going to realise all these epetitions are a waste of time.

Time and time again, despite what the govermnent say, they simply ignore them.

You mean like the Hillsborough one?

jimjames

innovate wrote: »

Assuming a basic rate tax payer, and a generous 3% AER on £5,640, the Treasury would make about £34 a year from this taxpayer's normal savings. If we had 10m basic rate tax payers putting their extra £5,640 into a cash ISA this year, that would be £340m lost revenue for the Treasury this year. Even if it was 10m higher rate tax payers, we'd still only be at a max of £680m - less than half the £2bn dunstonh mentions.

I've not seen the HMRC numbers but you are assuming a single year, it would only take 5 years for that to be the £2 billion.

On the other hand if the benefit to the taxpayer is only £34 doesn't that mean that the petition is a waste of time for most people?