Could the government raise the limit for tax free savings?

Dazed_and_C0nfused

older_and_no_wiser said:

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.

Up until June 2014 the cash ISA limit had never exceeded £6k so £20k is already quite a jump in recent years.

What_time_is_it

Beddie said:

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.

Well, it totally would be helping the rich wouldn't it? The idea of the government choosing to reduce a tax for people with over £50k of savings right now is totally laughable.

southone

I was only talking to someone last week about this very point who could see the government pushing the tax free allowance on savings up to five thousand and doing away with ISAs altogether

Dazed_and_C0nfused

I suspect there is some confusion on the subject of this thread.

The op was referring to non taxable interest I.e. Cash ISA's.

Not taxable interest.  Which might get taxed at 0% but still increases some people's overall tax liability.

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?

MK62

cricidmuslibale said:

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!

True, but this isn't down to government......there are extra costs involved for Cash ISAs, and for fixed term products, the rules dictate that the money has to be made available, even under penalty, and that's a risk for the lender vs a standard savings fixed term product.....and they'll reflect that risk in the rate......

There is also an element of the free market at work of course, in that they'll pay the rates they feel the market will stand.

cricidmuslibale

What_time_is_it said:

Beddie said:

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.

Well, it totally would be helping the rich wouldn't it? The idea of the government choosing to reduce a tax for people with over £50k of savings right now is totally laughable.

I don’t agree at all that people who have often slowly over time accumulated £50k of savings, trying to prudently put some of their income aside for a ‘rainy day’, should be classified as rich! They should be considered as doing the right thing in being careful with their money and in not expecting the state to always bail them out in hard times!

refluxer

Dazed_and_C0nfused said:

I suspect there is some confusion on the subject of this thread.

The op was referring to non taxable interest I.e. Cash ISA's.

Not taxable interest.  Which might get taxed at 0% but still increases some people's overall tax liability.

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?

Come on - it might not have been precisely worded, but I'm pretty sure from the context that the OP was referring to the PSA

talexuser

Yes, worry about a few crumbs of savings interest when your personal allowances have been fixed for years in the times of rampant inflation making you lose hundreds of pounds a year due to the fiscal drag which would not be the case in any other government that stuck by Rooker/Wise.

arnoldy

talexuser said:

Yes, worry about a few crumbs of savings interest when your personal allowances have been fixed for years in the times of rampant inflation making you lose hundreds of pounds a year due to the fiscal drag which would not be the case in any other government that stuck by Rooker/Wise.

Yes, but in UK personal allowances are many, many times higher than most of Europe. AND the tax credits system means many people are paying reverse tax! In fact, the current UK tax system is so heavily dependent on the "rich" it's probably not healthy. The tax base is narrow, taxes will always fall on the middle classes as there are more of them - and they are struggling under the weight of tax.

Take a Salary of £60k - deduct income tax £12k, NI £6k, graduate loan £3k, pension £6k, Council tax £3k. Leaving £30k - £2,500 month (HALF!!).

Oh and no freebies or child benefit. 

So impossible to buy a house. That won't improve until more people are net contributors to Government coffers and/or spending is hacked down.

ColdIron

Pension isn't a tax