Could the government raise the limit for tax free savings?

older_and_no_wiser

Just a thought, but would it be a good idea for the UK government (which has been doing such a sterling job of managing the UK economy recently ;-) ) to raise the current limit on non-taxable savings interest?

Before the current interest rate hikes, one had to have a huge amount of savings before hitting the tax limit. Now with 3/4/5% rates being so common, you can soon hit that taxable amount on the interest earned. 

I would think raising the limit could be a good policy in trying to reduce inflation by encouraging people to save more rather than spending.

refluxer

It's a nice idea but imagine how much money they'd generate if they did away with it altogether....

t1redmonkey

Funnily enough, I read in the Guardian a few weeks ago that Kwasi Kwarteng was actually going to announce a rise to savings allowances in the week after his mini budget.  Until the market backlash happened, then they shelved the extra things they were going to announce.

I've got a feeling they wouldn't bring in something like this now because of the possible market reaction to less tax coming in to the government.  But I do agree with you that it could actually help get inflation down by encouraging saving

Bigwheels1111

With the revolving door at number 10 who knows.

We all know tax has to go up.

Bt no one want to say it.

Albermarle

But I do agree with you that it could actually help get inflation down by encouraging saving 

On the other hand if too much is saved rather than spent, the impending recession will be worse. As usual a delicate balance.

P1Fanatic

After the backlash already seen of trying to reduce taxes as well as trying to boost the economy - why would anyone want to a) take in less tax and b) promote saving over spending?

razord

Yes they could - No they won't.

We're not gunna get any tax cuts for the next couple of years at least!

Beddie

There is zero chance of that happening in the near future, as tax rises will be the order of the day, not cuts. It would also be seen as helping "the rich" in this stupid 'politics of envy' country we live in.

dunstonh

Just a thought, but would it be a good idea for the UK government (which has been doing such a sterling job of managing the UK economy recently ;-) ) to raise the current limit on non-taxable savings interest?

Liz Truss just lost her job because she lowered taxes.   Virtually all those lowered were unwound and new ones introduced.   Do you really think it is likely that it is politically sensible for another new PM to lower taxes for the wealthy?

Albermarle

AIUI, the UK Has some of the better tax breaks in the world for savings already. Being able to shelter £20K a year in an ISA would be a dream for most Europeans at least.

cricidmuslibale

Albermarle said:

AIUI, the UK Has some of the better tax breaks in the world for savings already. Being able to shelter £20K a year in an ISA would be a dream for most Europeans at least.

The crucial issue with this is that interest rates on cash ISAs, both fixed and easy access, tend to be c 20 - 25 percent lower than the equivalent non ISA accounts, thus negating any tax saving you would otherwise and really probably should obtain!