MSE News: Budget 2015: Martin's reaction to the savings changes

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MoneySavingExpert.com creator Martin Lewis gives his instant reaction on the savings changes announced in today's Budget. ...

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Budget 2015: Martin's reaction to the savings changes'




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MarkBargain

New personal savings allowance - Good news for savers, but what cuts to public services will be introduced to pay for this?

The new Help to Buy ISA - May just push house prices up. Demand exceeding supply is the problem. Wouldn't the money be better spent building houses?

Changes to make ISAs more flexible- Minor change which won't affect many.

Castle

Santander only pays 3% on up to £20,000, not £33,333. Was Martin talking about including a joint A/C as well.

colsten

MarkBargain wrote: »

New personal savings allowance - Good news for savers, but what cuts to public services will be introduced to pay for this?

None. The funding comes from bank levies, selling banks shares, saving interest etc. Listen to the budget, it's online somewhere, or read the speech.

MarkBargain wrote: »

The new Help to Buy ISA - May just push house prices up. Demand exceeding supply is the problem. Wouldn't the money be better spent building houses?

People being able to buy means builders can sell houses.

MarkBargain wrote: »

Changes to make ISAs more flexible- Minor change which won't affect many.

Judging by the questions on the ISA board, it is very important to some. I am with you - minor change.

jamesd

MarkBargain wrote: »

Changes to make ISAs more flexible- Minor change which won't affect many.

Withdraw £100,000 from your cash ISA on 6 April and deposit into a higher paying after tax set of savings and current accounts. On 5 April withdraw it from the other accounts and pay it back into the cash ISA. Or do it with just £10,00 and probably have no tax to pay either way, but you still keep the ISA protection for when you get enough to go over the new 1,000 interest free limit.

You just got the higher non-ISA interest rate without having your money moved outside the ISA tax wrapper permanently. It's potentially a big deal for interest rate competition if it's used a lot.

Shame that it doesn't also apply to S&S ISA but unless something blocks it it will be possible to transfer from S&S to cash to use this approach.

masonic

jamesd wrote: »

Shame that it doesn't also apply to S&S ISA but unless something blocks it it will be possible to transfer from S&S to cash to use this approach.

Why on earth would you want to pull money out of a S&S ISA to put it into savings/current accounts?

betabraga

Interest rates are low, so every little helpsI say this is very good news for hard workers that want to save for the future and liked have no means on investing in housing. Live in London, way to expensive. Have been a carefully and safe when putting money away. And really appreciate the maturity dates

colsten

I doubt that the "take out as much as you want and then put it back" applies to anything more than the annual allowance. It would create problems for banks as it would be very (unacceptably?) difficult to control the extent of their commitments and risks. There is a good reason why some ISAs do not allow transfers in, namely control of the amount of money coming in.

Remember that there will be a consultation with the ISA providers before this comes live.

EDIT: Apparently it is any amount, not just the allowance. The banks will not like this. Although it has to be said that most cash ISAs probably only contain relatively small amounts of money.

Castle

jamesd wrote: »

Withdraw £100,000 from your cash ISA on 6 April and deposit into a higher paying after tax set of savings and current accounts. On 5 April withdraw it from the other accounts and pay it back into the cash ISA. Or do it with just £10,00 and probably have no tax to pay either way, but you still keep the ISA protection for when you get enough to go over the new 1,000 interest free limit.

Once you have taken the £100,000 out, you are then limited to putting back only £15,240 for 2015/16. At this rate it would take more than 6 years to refill your £100,000 ISA.


Of course with such low interest rates, £1,000 tax free annual allowance and better rates available in taxable accounts, the overall loss would be minimal.

jimjames

jamesd wrote: »

Shame that it doesn't also apply to S&S ISA but unless something blocks it it will be possible to transfer from S&S to cash to use this approach.

I can see it being a logistical nightmare to administer with transfer between cash and S&S ISAs possible. When shares could have risen or fallen the numbers could be all over the place.

Put £15k into S&S ISA, it drops to £5k. Transfer to cash ISA and then deposit another £10k and transfer back. Yi then have £15k again.

jamesd

masonic wrote: »

Why on earth would you want to pull money out of a S&S ISA to put it into savings/current accounts?

Have you see the rates on cash in S&S ISAs? Would make sense sometimes if you just want to be out of them market. Though I do confess that I was indulging myself a little in suggesting doing it with a couple of million Pounds in one post...

Castle wrote: »

Once you have taken the £100,000 out, you are then limited to putting back only £15,240 for 2015/16.

Please provide your source for your claim that the amount will be limited to the annual allowance. I saw no sign of it in the Budget 2015 document.

jimjames wrote: »

I can see it being a logistical nightmare to administer with transfer between cash and S&S ISAs possible.When shares could have risen or fallen the numbers could be all over the place.

According to the Budget 2015 document the money can only be taken out of a cash ISA so none of it can be in shares with varying values at the time. Somehow the deposit taker has to record how much has been taken out and can be paid back in. That number can have a range from 0 to 15 million as easily as it can a range from 0 to 15 thousand. It's just a number.

colsten wrote: »

I doubt that the "take out as much as you want and then put it back" applies to anything more than the annual allowance. It would create problems for banks as it would be very (unacceptably?) difficult to control the extent of their commitments and risks. There is a good reason why some ISAs do not allow transfers in, namely control of the amount of money coming in. ... Remember that there will be a consultation with the ISA providers before this comes live.

I can certainly see them recoiling in horror at the thought of someone transferring in a couple of million Pounds and doing this. Yet to maximise the value of this change it needs to allow it to be done for enough money to impose real competitive pressure on interest rates for deposits. I think that wanting to block that competition between ISA and non-ISA interest rates will be their main reason for opposing larger amounts than the annual limit, while I want rate competition and would like to see a higher limit. I agree with you that I think there will be a lower limit than a couple of million Pounds but I don't think politicians in general have any reason to continue to effectively give banks money by letting them pay lower interest rates on their ISA accounts than their non-ISA accounts.