No more basic rate tax on savings interest?

masonic

http://www.independent.co.uk/news/uk/politics/generalelection/budget-2015-savings-tax-scrapped-as-chancellor-puts-his-money-on-voters-with-cash-in-the-bank-10115062.html

Certainly something that will be welcomed by many if true. It will also make cash ISAs look an even worse option for most if they can now get 3/4/5% in current accounts with no basic rate tax payable.

InvestInPoker

Great news if true. Have to mega lol at this part

Mr Osborne has insisted there will be no "giveaways or gimmicks"

OH REALLY

bowlhead99

InvestInPoker wrote: »

Great news if true. Have to mega lol at this part

OH REALLY

Haha! "Yes, we're not 'giving something away', so much as 'telling a lot of people that pay taxes that they don't want to pay, that they will not longer have to pay those taxes, so long as we can afford for them not to pay us the taxes"

"No Giveway"

ORLY??
YA, SRSLY!!

kidmugsy

"giveaways or gimmicks" in budgets is one of the few remaining signs of democracy working. The electorate wants it, the electorate gets it: at least when elections are imminent.

bowlhead99

Exactly, the politician wants to get some support and he finds something that he feels that will win the hearts and minds of those whose hearts and minds he has not already won. So what is delivered is something that is wanted (or presumed to be wanted) by a large audience. Democracy in action.

As someone without masses of cash savings and not within the basic rate band, I would probably have preferred he gave away something else instead. However, it is not my demographic that he needs to court.

neilsedaka

This may not be as good news as first thought. ISA interest rates are lower than normal savings interest rates because the banks put the difference in their own pockets rather than passing on the tax break to consumers. Is the same thing likely to happen with normal savings?

bowlhead99

They will all consider what absolute amount of cash it would take to make a customer switch to them or switch away from a rival and what other savings and lending opportunities they can get by having a new customer.

That is for the public to decide not for the government. The rates are effectively set by supply and demand.

So, rates may change or they may not. Certainly before the age of austerity you didn't have banks paying 10x base rate on a current account and then when people's pockets got emptier during the credit crunch they realised that customers would like it if they did.

spikyone

I can't help but wonder why this is seen by the media as predominantly a vote-winner for pensioners. This is also great news for younger people trying to save for a deposit. Helping younger people get on the housing ladder must be done sensibly. Schemes like Help to Buy are only contributing to a vicious circle of house price inflation that leads to a greater need for H2B. Improving savings rates is a far better solution - one that encourages FTBs to take responsibility for their aspirations.

Let's be honest - many people don't understand ISAs, so taking away tax on "normal" savings is great news for everyone. Cash ISAs could become yet more redundant if the 40% tax threshold is increased to £50k. I can imagine this will cause much gnashing of teeth at Labour HQ, but Ed Balls' constant whining that the coalition have done nothing to help working families looks more idiotic by the day. It's time Labour realised that "helping people" doesn't mean throwing ever increasing sums of benefits at them.

kidmugsy

neilsedaka wrote: »

ISA interest rates are lower than normal savings interest rates because the banks put the difference in their own pockets rather than passing on the tax break to consumers.

Yeah it's all a plot. Probably the Queen, the Pope and the Rothschilds are behind it.

vectistim

It wouldn't really cost anything either (warning, here follows some back of an envelope calculations without looking up any input data first)

60,000,000 people = c. 45,000,000 adults = c 30,000,000 basic rate tax payers

Average balance in bank accounts for those basic rate payers. c. 3,000
Average interest rate 0.5% AER = £15 gross interest per year
20% tax = £3 per person per year
£3 per person x 30,000,000 people = £90,000,000

What is the cost saving for not having to administer that?

veryintrigued

Fantastic news if true.

Could indeed make Cash ISAs more irrelevant for large swathes.

These cash ISAs still would have a place for some though who choose to use the higher (circa 15k) allowance in addition to multiple RS and CAs.