Proposed £100k ISA lifetime limit

eskbanker

MarcoM said:

eskbanker said:

Thread title is unnecessarily clickbaity IMHO - as far as I can see there's no suggestion that the government is taking any notice of a report from a think-tank, so 'proposed' doesn't actually signify any likelihood of this independent suggestion being implemented as such....

Hello esbanker,

You don't think a future labout government would not consider the ISA reduction?

mebu60 said:

My bad for the 'clickbait' headline, if it looks like a proposal, is put forward as a proposal and smells like a proposal then clearly it's a suggestion, silly me!

My point was that (especially in the context of financial regulations) a 'proposal' typically has connotations of being made by a body with some sort of authority to implement it, whereas in this case it's clearly no more than a suggestion by someone with no remit to make any changes.

That's not to say that it couldn't happen of course, just that the thoughts of an economist, being relayed by a Daily Mail site, are being given undue credibility by being portrayed on here as a proposal - happy to be corrected if there is any evidence that any mainstream political party are actively considering this as a policy though....

booneruk

Band7 said:

Now that pension tax relief has been mentioned: I believe this costs the Treasury some £42 billion annually. If that were reduced (e.g. by setting tax relief at 25% for all), it would make a substantial sum of money available for other matters

That would rather complicate things for people like me - those in the higher rate bracket and salary sacrificing into a pension

Band7

booneruk said:

Band7 said:

Now that pension tax relief has been mentioned: I believe this costs the Treasury some £42 billion annually. If that were reduced (e.g. by setting tax relief at 25% for all), it would make a substantial sum of money available for other matters

That would rather complicate things for people like me - those in the higher rate bracket and salary sacrificing into a pension

well yes, that's why I said it wouldn't be popular

phillw

InvesterJones said:

It's a suggested action to try and tackle wealth inequality - which is based on the idea that societies are better if there is less wealth inequality and therefore some measure of wealth redistribution is needed.

I'm not convinced that the current government is concerned with what is better for society.
Their core voters are very much against wealth redistribution.

phillw

EthicsGradient said:

But the practicalities of implementing a limit of the total worth now look tough, and £100k seems fairly low for something that might have been built up over 25 years.

Also, after years of boomers being able to save tax on savings. Now that millennials are able to save, it's time to shut it down.

Thereby increasing the wealth gap.

InvesterJones

phillw said:

InvesterJones said:

It's a suggested action to try and tackle wealth inequality - which is based on the idea that societies are better if there is less wealth inequality and therefore some measure of wealth redistribution is needed.

I'm not convinced that the current government is concerned with what is better for society.
Their core voters are very much against wealth redistribution.

I wouldn't go so far as to say they're not concerned with what is better for society, just that, as I said, they don't necessarily believe wealth inequality is a bad thing (as long as there's a minimum level to avoid poverty). Two different economic models, for which there not enough of an obvious winner in the literature so that everyone agrees on one.

Albermarle

It could be worth noting that in many similar countries, there is much less scope for avoiding tax on savings interest.
Germans, French, Irish etc would be over the moon to be able to stash £100k away tax free.

Anonymous101

billy2shots said:

Unfortunately if you keep an eye on social media across the platforms, there is a huge tide of resentment in younger generations toward the 
'lucky' older generations. 

I wouldn't argue against this point but IMO its always existed. Those same people eventually accumulate wealth and their attitudes change as they age.

Albermarle

Band7 said:

Albermarle said:

As above, ISA's do proportionately benefit the better off, as they have the money to take better advantage of the tax break. Same with pension tax relief.
I am not saying either should necessarily being curtailed ( personally having taken advantage of them) but ISA's in particular have no benefit at all for the high % of people who have no , or little savings.

Now that pension tax relief has been mentioned: I believe this costs the Treasury some £42 billion annually. If that were reduced (e.g. by setting tax relief at 25% for all), it would make a substantial sum of money available for other matters. Such an adjustment of pension tax relief can easily be implemented technically, and would probably encourage more people to put more money into a pension. It would also make the [unrealistic] £1bn savings from tinkering with ISAs disappear into insignificance. Of course it wouldn't be a wildly popular move, either, but we need to get to grips with the fact that some unpopular moves are now unavoidable.

If we bring pensions into the discussion, then may as well mention another idea being floated ( or at least I have seen it mentioned more than once) . Including pension pots in inheritance tax calculations......

Anonymous101

InvesterJones said:

It's a suggested action to try and tackle wealth inequality - which is based on the idea that societies are better if there is less wealth inequality and therefore some measure of wealth redistribution is needed. Taxes are the primary mechanism for this redistribution, therefore progressive taxes are of interest so that you maximise wealth redistribution while aiming to minimise negative effect on wealth generation.

It's not by any means the accepted route forward by government - quite the opposite in fact, especially if you believe in Trussonomics.

Means-tested pensions and wealth taxes are probably more direct routes to wealth redistribution, but they're politically unpalatable, so the next best thing is reduced tax-relief, which in the minds of politicians achieves the same thing as increased tax without jane public noticing, see also fiscal drag.

I don't disagree that wealth inequality is a huge issue and requires some careful thought to address. I do feel as though taxing savings or introducing wealth taxes in other ways not only try to treat the symptom rather than the cause but they overly punish those in middle classes which have chosen to save / invest rather than spend. Its as much a lifestyle choice tax as a wealth tax for me which the truly wealthy will avoid - agreed spoke as a relatively comfortable middle class saver.

The focus has to be on taxation of top few percent income individuals and redistribution to those at the bottom. I'm thinking those with nett worth's in the tens of millions and above rather than those with a few hundred grand in an ISA.