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MSE News Comment - Martin Lewis: Will you really gain from the new NISAs? - Page 3

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MSE News Comment - Martin Lewis: Will you really gain from the new NISAs?

edited 19 March 2014 at 6:17PM in ISAs & Tax-free Savings
62 replies 11.3K views
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  • gadgetmindgadgetmind Forumite
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    I'm also pleased to see the first positive news regards pensions and ISAs that we've had for quite a few years.

    Even putting the 120%->150% GAD boost into our retirement spreadsheet makes things look shiny. If I can also later have my wife using her full personal allowance from 55+ to draw heavily on her pension before SP kicks in, then things look even better.
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  • edited 20 March 2014 at 9:36AM
    chucknorrischucknorris Forumite
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    edited 20 March 2014 at 9:36AM
    mikemoate wrote: »
    Typical tory con!! Who will derive any benefit from this? Given the paltry rates on cash isa's at the moment, only those paying 40% tax. Tory friends!!!

    If cash ISA rates are too low for you, haven't you considered a SS ISA? You will receive dividend income of around 2.7 to 3.2% plus the opportunity for capital growth (especially when you consider that you sell them when you want to, i.e. when there is capital growth).


    Now that there is full flexibility for transfers between the two (SS and cash) I will be investing 100% in the SS version while interest rates are so low.


    EDIT: The news on pensions/annuities was even better IMO.
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  • Archi_BaldArchi_Bald Forumite
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    mikemoate wrote: »
    Typical tory con!! Who will derive any benefit from this? Given the paltry rates on cash isa's at the moment, only those paying 40% tax. Tory friends!!!

    Can you explain where exactly the con is in yesterday's budget in general, and in the NISA announcement in particular? Not even Ed Balls called it a con, even though he is desperately trying to pick holes into it, as is his job as the shadow chancellor.
  • edited 20 March 2014 at 11:18AM
    nearlyrichnearlyrich Forumite
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    edited 20 March 2014 at 11:18AM
    jimjames wrote: »
    You've got to be pretty loaded as a couple to pay in £30k per year when the average wage is below that. I'd think anyone who can save that kind of money must be earning 6 figures so the benefit to the average person is pretty small and the high earners will do best.


    I can save a good percentage of my take home pay and £15k a year is possible as currently I save into a S & S ISA and a couple of other none ISA regular savings products. The good news for me is that I can move the previously saved money to cash if the stocks get volatile whilst keeping them under a tax efficient wrapper. This makes me feel a lot more secure.


    I don't dispute that I would be classed as a high earner now but when I was in my 30s with 2 dependent children and a mortgage I still prioritised saving over spending frivolously whilst having a decent standard of living. Hence I have a half decent ISA pot which will help to fund the gap between my planned retirement and the state's date of paying my hard earned pension..at 67 rather then 60 when I started paying in.

    The changes in private pension arrangements are also of benefit to me as I was wary of buying an annuity but would like to spend more of my pot whilst young enough to enjoy it even if it is taxable.
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  • ColdIronColdIron Forumite
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    jimjames wrote: »
    You've got to be pretty loaded as a couple to pay in £30k per year when the average wage is below that. I'd think anyone who can save that kind of money must be earning 6 figures so the benefit to the average person is pretty small and the high earners will do best.
    Not all ISA contributions come from wages. There are many people with substantial cash savings or investments that they have built up over the years who are moving them to the shelter of an ISA. Many of these people may even be retired or on a low income
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  • edited 20 March 2014 at 12:39PM
    chucknorrischucknorris Forumite
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    edited 20 March 2014 at 12:39PM
    jimjames wrote: »
    You've got to be pretty loaded as a couple to pay in £30k per year when the average wage is below that. I'd think anyone who can save that kind of money must be earning 6 figures so the benefit to the average person is pretty small and the high earners will do best.


    We both will be saving/investing the full £30k, previously I used to use my wife's SS ISA allowance as she wasn't keen, but now because they are flexible and savings rates are so low she is going to invest all her £15k in SS ISA's (so am I). I also invest up to the max pension allowance for tax relief (£50k this year but reduces to £40k next year). Our employment earnings are only £41k and £51k although we do have other income.
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  • bryanbbryanb Forumite
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    jimjames wrote: »
    You've got to be pretty loaded as a couple to pay in £30k per year

    Maybe, but some of us are on pensions with largish sums saved over the years,and gradually ISAing them at about 5k+ p.a.
    It will be good to transfer them to NISA's at 15k p.a. to avoid paying tax on the interest.
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  • mikemoate wrote: »
    Typical tory con!! Who will derive any benefit from this? Given the paltry rates on cash isa's at the moment, only those paying 40% tax. Tory friends!!!
    Err, every tax payer could benefit from shielding their savings from tax. The 20% tax payers will still benefit by, well, 20%! Losing 20% might be better than losing 40%, but it's a damn sight worse than losing 0% - so ISAs are as much for basic rate payers. Whether people are earning 1%, 3% or 5% - getting to keep 100% of the interest is obviously better than keeping 60% or 80% of it. You could argue it's even more important in times like this not to have the taxman taking his cut.

    I also can't understand the attitude that cash savings are inherently worse right now because of the interest rates. Cash will always be a loser. It would be no better to have 3% interest rates and inflation at 4%, than it is to have 1% interest rates and 2% inflation. In the long term cash will always lose out, all the more so if the taxman's taking a cut. Still, people generally need to build up some cash savings - so it's generally for the better that they can build this away from the taxman's prying hand.
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  • edited 20 March 2014 at 3:58PM
    home_alonehome_alone Forumite
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    edited 20 March 2014 at 3:58PM
    ColdIron wrote: »
    Not all ISA contributions come from wages. There are many people with substantial cash savings or investments that they have built up over the years who are moving them to the shelter of an ISA. Many of these people may even be retired or on a low income

    Yes I and my wife are retired and have savings that could give us the max yearly isa for some years to come, question is I imagine that the protected upper limit for savings still applies £85000 with one provider. Yes its there with martins guide to cash isas never thought I would worry about that with isas but with the new limit you could get there quite quickly.
  • Archi_BaldArchi_Bald Forumite
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    home_alone wrote: »
    question is I imagine that the protected upper limit for savings still applies £85000 with one provider.

    The £85K FSCS limit per person per financial institution for savings is entirely unaffected by yesterday's budget. So is the FSCS limit for investments (£50K) even though the nature of it is entirely different to the cash protection one.

    You are not forced to keep all your ISAs with one provider, nor are you forced to keep all your cash in a single cash ISA, or all your investments in a single S&S ISA.
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