Could the government raise the limit for tax free savings?

Albermarle

Millyonare said:

UK tax is only trending in one direction, and that's up. It's not coming down. That would seem to be correct

We've had a decade of red Tories and taxes have soared to a record high (outside war). Not correct, the current tax burden of 33/34% has been similar for the last 20 years and is lower than when it peaked in the 1970's The current round of increases will take us to about that level though ( 35%) once they kick in .Recent attempts to cut tax have been howled down by the hysterical media. The UK is the only G7 economy spiking major taxes after the pandemic. We've got a decade of red Labour coming up after the next election and they love to tax and spend other people's money. We are trapped in a Marxist taxation loop.

It is thus more likely the future tax-free savings limit will be reduced or scrapped, not raised.

I also expect future private-pension taxes to be increased, and saving limits decreased.

The days of a low tax burden are all but over. Not really surprising after Covid.  Money does not grow on trees as Liz soon found out "

Dyor, etc.

Chart: UK tax burden to hit highest level since the 60s | Statista

Although a tax burden of 35% is relatively high in global terms, it is still below many other Western European countries.
Germany 37.5%
Italy 42.5%
Sweden & Belgium 44%
France and Denmark 46%

Ultrasonic

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!

Whilst I know it's been true for a long time now, I'm curious why it is that ISA saving rates tend to be lower if anyone knows?

Checking today though out of interest for myself, I make it that it's currently better for basic rate taxpayers to make use of ISAs (although not by a huge amount).

The top paying 1 year fixes pay 3.90% for the ISA and 4.52% for the normal fix (reduced to effectively 3.62% once 20% tax paid).
The top paying 2 year fixes pay 4.30% for the ISA and 4.77% for the normal fix (reduced to effectively 3.82% once 20% tax paid).

The argument for ISAs is of course much more clear-cut for higher rate tax payers.

Yellowman

I seem to remember ISA rates being higher than easy-access rates about 10-15 years ago.

Is there a link to a comparison graph over time?

masonic

Ultrasonic said:

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!

Whilst I know it's been true for a long time now, I'm curious why it is that ISA saving rates tend to be lower if anyone knows?

Checking today though out of interest for myself, I make it that it's currently better for basic rate taxpayers to make use of ISAs (although not by a huge amount).

The top paying 1 year fixes pay 3.90% for the ISA and 4.52% for the normal fix (reduced to effectively 3.62% once 20% tax paid).
The top paying 2 year fixes pay 4.30% for the ISA and 4.77% for the normal fix (reduced to effectively 3.82% once 20% tax paid).

The argument for ISAs is of course much more clear-cut for higher rate tax payers.

I alluded to it in my earlier post. HMRC requires that all cash ISAs allow access at any time. So, fixed term ISAs do not provide the ISA manager with fixed capital for a defined term - they are easy access ISAs with a penalty for early access. The fact early access is permitted at all restricts the sort of lending that can be done with the cash, so the rates are lower to reflect that.

Albermarle

Whilst I know it's been true for a long time now, I'm curious why it is that ISA saving rates tend to be lower if anyone knows?
There is more admin for the provider and if they made ISA rates similar to non ISA rates, they would have more ISA customers who take more time to deal with. Especially I guess with transfers.

Millyonare

Albermarle said:

Millyonare said:

UK tax is only trending in one direction, and that's up. It's not coming down. That would seem to be correct

We've had a decade of red Tories and taxes have soared to a record high (outside war). Not correct, the current tax burden of 33/34% has been similar for the last 20 years and is lower than when it peaked in the 1970's The current round of increases will take us to about that level though ( 35%) once they kick in .Recent attempts to cut tax have been howled down by the hysterical media. The UK is the only G7 economy spiking major taxes after the pandemic. We've got a decade of red Labour coming up after the next election and they love to tax and spend other people's money. We are trapped in a Marxist taxation loop.

It is thus more likely the future tax-free savings limit will be reduced or scrapped, not raised.

I also expect future private-pension taxes to be increased, and saving limits decreased.

The days of a low tax burden are all but over. Not really surprising after Covid.  Money does not grow on trees as Liz soon found out "

Dyor, etc.

Chart: UK tax burden to hit highest level since the 60s | Statista

Although a tax burden of 35% is relatively high in global terms, it is still below many other Western European countries.
Germany 37.5%
Italy 42.5%
Sweden & Belgium 44%
France and Denmark 46%

The UK tax burden was around 30% in 1990, leaping to 33% in 2022 and on track for 36% by 2026 (maybe higher), the highest ever outside war and the lag of its immediate aftermath. Rocketing high and fast.

Worth noting that no other G7 country is raising major taxes post-covid right now. Many are cutting. Almost all have more debt. The UK has a bizarre culture to self-flagellate and inflict needy misery on itself.

The US tax burden is only 28%, its GDP per-head is 2 x higher than the EU, and much higher than Germany, Italy, etc. Measured by wealth per-head, the chasm is yawning, the US is around 30-300% higher than Sweden, Germany, etc. The US is a significantly richer country and union.

masonic

Millyonare said:

The US tax burden is only 28%, its GDP per-head is 2 x higher than the EU, and much higher than Germany, Italy, etc. Measured by wealth per-head, the chasm is yawning, the US is around 30-300% higher than Sweden, Germany, etc. The US is a significantly richer country and union.

Most of us this side of the pond wouldn't be in favour of adopting the US system of healthcare etc in exchange for lower taxation (at least I wouldn't). Though I do agree with you that the spectre of Austerity II would be taking things too far in the opposite direction.

wmb194

Ultrasonic said:

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!

Whilst I know it's been true for a long time now, I'm curious why it is that ISA saving rates tend to be lower if anyone knows?

Checking today though out of interest for myself, I make it that it's currently better for basic rate taxpayers to make use of ISAs (although not by a huge amount).

...

The argument for ISAs is of course much more clear-cut for higher rate tax payers

Over the years one of the explanations from people in the press who claimed to know was they are deliberately pitched at higher rate taxpayers and it's just a way for the institutions to take advantage and lower their cost of borrowing.

subjecttocontract

Why ISA interest rates are lower is one of the mysteries of modern life. Just like the question, why is diesel more expensive than petrol in the UK ?

Albermarle

Millyonare said:

Albermarle said:

Millyonare said:

UK tax is only trending in one direction, and that's up. It's not coming down. That would seem to be correct

We've had a decade of red Tories and taxes have soared to a record high (outside war). Not correct, the current tax burden of 33/34% has been similar for the last 20 years and is lower than when it peaked in the 1970's The current round of increases will take us to about that level though ( 35%) once they kick in .Recent attempts to cut tax have been howled down by the hysterical media. The UK is the only G7 economy spiking major taxes after the pandemic. We've got a decade of red Labour coming up after the next election and they love to tax and spend other people's money. We are trapped in a Marxist taxation loop.

It is thus more likely the future tax-free savings limit will be reduced or scrapped, not raised.

I also expect future private-pension taxes to be increased, and saving limits decreased.

The days of a low tax burden are all but over. Not really surprising after Covid.  Money does not grow on trees as Liz soon found out "

Dyor, etc.

Chart: UK tax burden to hit highest level since the 60s | Statista

Although a tax burden of 35% is relatively high in global terms, it is still below many other Western European countries.
Germany 37.5%
Italy 42.5%
Sweden & Belgium 44%
France and Denmark 46%

The UK tax burden was around 30% in 1990, That is true leaping to 33% in 2022  around 2001 and staying around a similar level for the last 20 years. and on track for 36% by 2026 (maybe higher), quite possibly the highest ever outside war and the lag of its immediate aftermath. Rocketing high and fast.

Worth noting that no other G7 country is raising major taxes post-covid right now. Many are cutting. We tried that in the last few weeks and it didn't seem to work very well..... Almost all have more debt. The UK has a bizarre culture to self-flagellate and inflict needy misery on itself.

The US tax burden is only 28%, its GDP per-head is 2 x higher than the EU, and much higher than Germany, Italy, etc. Measured by wealth per-head, the chasm is yawning, the US is around 30-300% higher than Sweden, Germany, etc. The US is a significantly richer country and union.

Most of us this side of the pond wouldn't be in favour of adopting the US system of healthcare etc in exchange for lower taxation (at least I wouldn't)

Agreed .