Proposed £100k ISA lifetime limit

Altior

Band7 said:

Altior said:

  

There's a section of society that feels entitled without putting in the work.  

Those that can afford not to work without claiming benefits are entitled to do so. Those capable of working but thinking of living on taxpayer money do have a rough time, as those who have ever claimed working age benefits will know all too well. Those not capable of working, for whatever reason - children, senior, disabled - are entitled not to work, without feeling guilty/

Altior said:

 
If you're born a female in this country, and happy to have a number of children, it's entirely possibly to go from cradle to grave, without doing a minute's work, and live a pretty comfortable life. ISA or no ISA. 

Were you actually meant to suggest that stay-at-home mums don't do a minute's work, and that they don't deserve a comfortable life?

I suspect you're confusing the first quote. Of course there are people who are entitled to benefits. I have claimed benefits. I'm referencing the section that deliberately set out to game the system. To be absolutely clear, that does not include everyone who claims benefits. 

I also have real world (anecdotal) experience of this and know how many job applicants I received from people who wanted to work 16 hours and no more (a few years ago). When a system is set up to hand out money, it will be gamed. As easily evidenced by the multiple covid schemes that were abused, inside and outside of government. 

I'm suggesting that there are women who milk the system, and having multiple children is a reasonably easy window into that. I'm sure some men would do it too, if they could. My mum was a stay-at-home mum, and she worked hard running the household. But I also had a go-to-work dad, other working people didn't subsidise our living and lifestyle (and saving).

In the context of the proposal, the point I was making is that there will always be people who don't take advantage of possible tax shelters. It doesn't necessarily follow that is because there's a problem with the structure of the shelter. 

mebu60

Extract from Investors' Chronicle article this morning on Davos. Many of us may not agree with or like the way things are heading but I think it's wise to understand and be prepared (mentally and practically) for other agendas to prevail.

The social unrest referenced in the WEF polycrisis list may or may not include the anger of the young at older generations holding a disproportionate amount of wealth and at how it often simply landed in their lap. With new first-time buyers now needing to spend around 40 per cent of their net take-home pay on mortgage payments, and to have saved 112 per cent of their gross salary to accumulate a deposit for their first home, there may be bigger changes to come. People who are prevented from achieving financial security will naturally give their support to redistributive policies such as the removal of tax breaks for the well-off and the introduction of wealth or property taxes that could break the status quo. Assuming that tax allowances and reliefs will remain unchanged could be a mistake – capital gains tax has already been targeted. And there are plenty of groups pressing for tax changes to encourage downsizing as a way to release properties for younger families.

Band7

Altior said:

I also have real world (anecdotal) experience of this and know how many job applicants I received from people who wanted to work 16 hours and no more (a few years ago). When a system is set up to hand out money, it will be gamed. As easily evidenced by the multiple covid schemes that were abused, inside and outside of government. 

I'm suggesting that there are women who milk the system, and having multiple children is a reasonably easy window into that. I'm sure some men would do it too, if they could. My mum was a stay-at-home mum, and she worked hard running the household. But I also had a go-to-work dad, other working people didn't subsidise our living and lifestyle (and saving).

My final comment on your posts, as we are rapidly going way off-topic. 

There are many reasons why people don't want to work more than 16 hours, starting from not having more than 16 hours alongside family commitments, or even alongside another job they already have. The other issue can be that they would have to exist on less money if they worked more than 16 hours because the working age benefits system works against them. This isn't gaming the system, but a matter of survival for many of those faced with the dilemma.

Glad to hear that your mum is an example of one of the tens, or even hundreds, of thousands of stay-at-home mums who are working hard, and who are in a partnership with a person who brings enough money into the household so they have enough money to save in pensions and/or ISAs, whilst also bringing up the next generation.

Albermarle

Anecdotal, but most of the people I work with are younger than me. It's a fintech firm, and a certain level of intelligence is needed to get in the door. Not mentioning that to big myself up, just to observe that they aren't of low intelligence. 
Most of the young people are absolutely clueless about personal finance.

Maybe why a lot of fintech/P2P sites went bust ??

In reality the large majority of young people have never been interested in personal finance, so nothing really new .

Altior

Albermarle said:

Anecdotal, but most of the people I work with are younger than me. It's a fintech firm, and a certain level of intelligence is needed to get in the door. Not mentioning that to big myself up, just to observe that they aren't of low intelligence. 
Most of the young people are absolutely clueless about personal finance.

Maybe why a lot of fintech/P2P sites went bust ??

In reality the large majority of young people have never been interested in personal finance, so nothing really new .

Specific Fintech discussion is going OT, so defer away from that element

Totally agree, it's not much different. I like to help people, so I try and get them to open up to convos about finance, without looking for personal specifics. Generally it's as one might expect, pensions are for old people, and they'll worry about them later in life. Then I explain concepts that most people in here will be fluent with, the beauty of SS, employer matching and compounding. I stay away from direct advice as there could be alternative options that are more useful where they are in their life cycle, such as LISA. It's more about explaining the advantages in a real world context of tax efficient shelters. 

What is different is the way the internet has developed, social media amplification and political lobbying. If someone asked me (I doubt they would obviously) about how to get young adults to use all of tax efficient options available to them, it is being educated about them in terms they can directly relate to, and engage with. The authorities kind of went about it using auto enrolment, being defaulted in, rather than education. Mostly in unnecessarily cautious default funds of course. 

spnego

if you add up inflation since the inception of the isa, 20k today has the same purchasing power as around 10k back then.

expansion

EthicsGradient said:

Well, yes, it is just a suggestion from a think tank, and it would be a lot more helpful if the opening post made that clear.

Half of the paper is about increasing Help To Save, but that's got lost in the talk about the suggestion on how to pay for that, with the ISA restriction.

I don't think it's a great idea, though the ISA rules have been generous to the rich (and that includes me) over the years - getting a tax break on saving two thirds of the median income is pretty nice. Not many people can afford to put that much aside, year after year, so maybe that should have been lower (£5k? £10k?), and could be lower in the future. 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. I saw a suggestion that maybe a combined limit for the pension lifetime allowance and ISAs might be "fair" - if you've got a lot in both, you don't need the tax breaks.

We don't need more Help To Save type campaigns. These only drive up the housing market further. The remedy is to build more houses. This will reduce the price. However house prices are high because the government wants them to be. Isn't this simple and clear enough for all to see? Well actually it's not so simple anymore because we have a shortage of construction workers even if we wanted to build. Haven't we had enough examples in the last years with other campaigns like stamp duty cuts where the seller just raises the price by the same rate like sellers do when ebay puts out a discount code.

"combined limit for the pension lifetime allowance and ISAs might be "fair" - if you've got a lot in both, you don't need the tax breaks." Why should a wealth tax be limited to tax advantaged investment accounts? The greatest typical asset for Brits is their house. If you have £200k in investment accounts you're rich, if you own a £200k pound home you're average? Also I know people pinching pennies in rented squalor to max pension and ISA. It's not easy and only for the rich to max them.

expansion

Albermarle said:

ayvan said:

£100,000 is rich? You can not buy a barn for £100,000. In UK it is not clever to work and earn and save for normal person. Better live the life, you can be lazy and spend everything and then ask government for money. Half your work is tax to pay for lazy.

In other countries they can only dream of protecting so much savings interest from tax. The UK has a very generous system for people to earn interest tax free. Plus the interest on offer from some banks is also better than offered in many other countries. Even if this suggestion to limit ISA's to £100K ever sees the light of day, there is still the Personal savings allowance, before any tax on interest would be paid.

The UK has one of the highest levels of taxation and must be near the very top in terms of worst return for public services. Pay like a Scandi for nothing. I don't mind a cut in tax advantage accounts if it also means a cut in income tax and national insurance not to mention the other add on tax but not tax like council tax, TV license, alcohol, sugar to balance things to other countries. Bank interest is linked to value of currency. Or maybe you see good opportunity in Zimbabwe or Venezuela?

jimjames

Altior said:

The posters who want to tax people at the top already paying millions in tax even more, at what point would they be satisfied that people at the top are paying enough?

Till the pips squeak?

Albermarle

expansion said:

Albermarle said:

ayvan said:

£100,000 is rich? You can not buy a barn for £100,000. In UK it is not clever to work and earn and save for normal person. Better live the life, you can be lazy and spend everything and then ask government for money. Half your work is tax to pay for lazy.

In other countries they can only dream of protecting so much savings interest from tax. The UK has a very generous system for people to earn interest tax free. Plus the interest on offer from some banks is also better than offered in many other countries. Even if this suggestion to limit ISA's to £100K ever sees the light of day, there is still the Personal savings allowance, before any tax on interest would be paid.

The UK has one of the highest levels of taxation and must be near the very top in terms of worst return for public services. Pay like a Scandi for nothing. I don't mind a cut in tax advantage accounts if it also means a cut in income tax and national insurance not to mention the other add on tax but not tax like council tax, TV license, alcohol, sugar to balance things to other countries. Bank interest is linked to value of currency. Or maybe you see good opportunity in Zimbabwe or Venezuela?

I was not being political. Just stating a fact ( on a savings and investment forum on the topic of savings interest ) that you can earn a LOT more savings interest tax free in the UK , than in most other countries.
If you want a political comment, it would be that these very generous allowances really only significantly benefit relatively well off people.