If Cash ISAs are ended by Government.

XzavierWalnut

As an example, if I am not working or eligible for state pension yet, and earning £5k per annum from private pensions, could I transfer the money from my cash ISAs into a standard interest rate account, and earn £13,570 per annum without paying any tax?
From what I have read I believe this is the case.

eskbanker

If your taxable income is up to £18,570, you won't pay tax if the bulk of it is savings interest, but if your premise is abolition of cash ISAs then who knows what else would change in that scenario?!

https://www.moneysavingexpert.com/savings/tax-free-savings/

Albermarle

XzavierWalnut said:

As an example, if I am not working or eligible for state pension yet, and earning £5k per annum from private pensions, could I transfer the money from my cash ISAs into a standard interest rate account, and earn £13,570 per annum without paying any tax?
From what I have read I believe this is the case.

From what you say you should not actually be saving in an ISA anyway as no need to .

On the other side the Govt has said nothing about abolishing cash ISAs, it is only fevered speculation in certain media outlets, who are against the Govt. So just ignore it.

eskbanker

Albermarle said:
From what you say you should not actually be saving in an ISA anyway as no need to .

While it's true that there's no need to use ISAs for those whose taxable interest falls within the various allowances, that doesn't mean they shouldn't, especially when market-leading cash ISAs are currently paying better interest than the equivalent taxable accounts!

badger09

Irrespective of the current speculation, the annual ISA allowance is a use it or lose it opportunity. With the proliferation of Flexible ISAs, it makes little sense to lose (waste?) it. 

Kim_13

If you believe changes will be made to savings arrangements, then it would make sense to move into ISAs now, even if currently paying no tax on the interest. If they remove them, you’d be no worse off than you would have been had you taken no action, but if government were to say abolish the Starter Rate for Savings, then the more you have in ISAs the better, as for those funding early retirement, interest is likely to exceed the £1,000 PSA (which I think is more likely to stay as is as working people benefit from that but probably not the starting rate.)

It’s more likely the £20,000 limit is changed going forward (and the City have apparently been urging Reeves to insist that a proportion of the allowance is S&S only, which would be unsuitable for older people as they would be unlikely to be able to commit to a sufficient timescale to minimise risk to the capital - needing the funds to pay for care, etc.) So it makes sense to max out in cash while available if this would negatively impact you.

masonic

badger09 said:

Irrespective of the current speculation, the annual ISA allowance is a use it or lose it opportunity. With the proliferation of Flexible ISAs, it makes little sense to lose (waste?) it. 

The only savings accounts that are incompatible with this are fixed term accounts (1 year term or greater). Those do not seem all that attractive at the moment.

Albermarle

Kim_13 said:

If you believe changes will be made to savings arrangements, then it would make sense to move into ISAs now, even if currently paying no tax on the interest. If they remove them, you’d be no worse off than you would have been had you taken no action, but if government were to say abolish the Starter Rate for Savings, then the more you have in ISAs the better, as for those funding early retirement, interest is likely to exceed the £1,000 PSA (which I think is more likely to stay as is as working people benefit from that but probably not the starting rate.)

It’s more likely the £20,000 limit is changed going forward (and the City have apparently been urging Reeves to insist that a proportion of the allowance is S&S only, which would be unsuitable for older people as they would be unlikely to be able to commit to a sufficient timescale to minimise risk to the capital - needing the funds to pay for care, etc.) So it makes sense to max out in cash while available if this would negatively impact you.

It is a big leap from your comment in bold, to it actually happening, which seems very unlikely.

Swipe

Worse case scenario if they are removed, would be to open a S&S ISA and put your cash in a money market fund.

ZeroSum

badger09 said:

Irrespective of the current speculation, the annual ISA allowance is a use it or lose it opportunity. With the proliferation of Flexible ISAs, it makes little sense to lose (waste?) it. 

That's of course on the assumption that you can actually afford to use it.

masonic

Swipe said:

Worse case scenario if they are removed, would be to open a S&S ISA and put your cash in a money market fund.

There was another thread in the ISAs subforum discussing this and we recalled that in the early days very low risk stuff wasn't ISA eligible in the S&S component.