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Martin Lewis: Is the £20,000 cash ISA limit about to be killed off?
Comments
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It's sad when solid knowledge and expertise is being brushed aside.A sign of the times, perhaps.3
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I'm afraid this idea of being encouraged to invest in stocks and shares isa instead of cash isa needs some serious looking at.All well and good investing your savings into stocks and shares ISA if you are young but if you're getting on a bit in your mid 60's, it's not like you want to lock your savings away for the required time invested, (5 years at least) and with no guarantee against making a loss!Many people of my age count on their savings as a safety net to back up their existing SIPPS, and now this is going to mean those backup savings are invested too, with more risk!And how this is going to help the UK economy grow I don't know, because no way am I investing in uk industries, and I am pretty sure I'm not on my own there.4
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Currently one can transfer funds from a S&S ISA to a Cash ISA - I've done that a few times myself. Assuming that facility will remain:-
If the Treasury introduces this annual £4k (let's say) cap on Cash ISA deposits and leaves (say) £16k potential for an S&S ISA, to encourage S&S investing, then careful planning could presumably work around this to still get the full £20k per annum into a Cash ISA from year two onwards...
Tax year 1: Put £4k into a Cash ISA and £16k into S&S ISA.
Tax year 2: Put £4k into a Cash ISA, £16k into S&S ISA.... and transfer last tax year's £16k from the S&S ISA to a Cash ISA.
Tax year 3 and onwards: As year 2, rinse & repeat.
This way you are effectively saving the full £20k per annum into a Cash ISA, unless I've missed something?
Those naturally averse to S&S investment risk could find a lower risk fund and their exposure should never rise much above £16k using this process. Timing it right, putting the £16k into a S&S ISA late in the tax year and transferring it back out early in the next, should minimise their exposure still further. Ok, it's a faff, but could it offer a legitimate way to keep your Cash ISA topped up to max, like we enjoy today?
If, on the other hand, the Treasury blocks the current right to transfer from an S&S ISA to a cash ISA, or imposes further restrictions, that will have much wider implications. It would certainly discourage me from investing in S&S ISAs in the future, if I could no longer freely switch the funds back to a cash ISA at will. As people age, the usual advice is to reduce risk by gradually transferring from S&S to Cash. If the intention is to encourage S&S ISA investing, any restrictions in this area could well backfire.
Disclaimer: This is NOT to be taken as financial advice. Please do your own research. I will not be held responsible for any decisions you make.
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Bernythedolt said:Currently one can transfer funds from a S&S ISA to a Cash ISA - I've done that a few times myself. Assuming that facility will remain:-
If the Treasury introduces this annual £4k (let's say) cap on Cash ISA deposits and leaves (say) £16k potential for an S&S ISA, to encourage S&S investing, then careful planning could presumably work around this to still get the full £20k per annum into a Cash ISA from year two onwards...
Tax year 1: Put £4k into a Cash ISA and £16k into S&S ISA.
Tax year 2: Put £4k into a Cash ISA, £16k into S&S ISA.... and transfer last tax year's £16k from the S&S ISA to a Cash ISA.
Tax year 3 and onwards: As year 2, rinse & repeat.
This way you are effectively saving the full £20k per annum into a Cash ISA, unless I've missed something?
Those naturally averse to S&S investment risk could find a lower risk fund and their exposure should never rise much above £16k using this process. Timing it right, putting the £16k into a S&S ISA late in the tax year and transferring it back out early in the next, should minimise their exposure still further. Ok, it's a faff, but could it offer a legitimate way to keep your Cash ISA topped up to max, like we enjoy today?
If, on the other hand, the Treasury blocks the current right to transfer from an S&S ISA to a cash ISA, or imposes further restrictions, that will have much wider implications. It would certainly discourage me from investing in S&S ISAs in the future, if I could no longer freely switch the funds back to a cash ISA at will. As people age, the usual advice is to reduce risk by gradually transferring from S&S to Cash. If the intention is to encourage S&S ISA investing, any restrictions in this area could well backfire.
Disclaimer: This is NOT to be taken as financial advice. Please do your own research. I will not be held responsible for any decisions you make.2 -
Suzycoll said:masonic said:Suzycoll said:booneruk said:Suzycoll said:
I have decided to start withdrawing half my savings from my cash ISA & put it in a safe at my house ! Call me stupid but .... Thoughts ?
You'll also introduce the cash to theft/fire risk.Governments control cash whether it is in an ISA or under your mattress. They can devalue it through their actions or inactions. This could be an argument for investing, as your fortunes can be disconnected from your country's own financial prospects.I'm beginning to wonder what I missed not following Martin's blog. Was this the week where he fell down the rabbit hole?2 -
I think one major point being missed here is why a lot of people use cash ISAs. Doing a, rather unscientific, poll amongst people I know that have cash isas. They use the Isa as a means of saving cash until they need it for something, this way they are not paying more tax than they need to. Needless to say most of these people are pensioners, many of whom don't have vast savings, but just too much to claim benefits so are trying to make as much use of their money as possible. They can't afford the, long term, stocks and shares volatility, as they are older and possibly have need of the cash more quickly. Once again the government is forgetting its older members of society4
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Another point that keeps being mentioned is that it won’t affect money already in a cash isa - I wouldn’t trust this at all as the government can easily change the rules on anything they see fit so wouldn’t be surprised if they found some way around it.Governments of all types just seem to think our money is theirs and they can take it as they see fit.Mortgage free!
Debt free!
And now I am retired - all the time in the world!!1 -
Transfers from S&S ISAs to cash ISAs would need to be stopped, otherwise the restriction would be pointless.......
If this is the case perhaps cash ISA rates will be depressed until it happens due to excessive demand.1 -
BadAnnie said:I think one major point being missed here is why a lot of people use cash ISAs. Doing a, rather unscientific, poll amongst people I know that have cash isas. They use the Isa as a means of saving cash until they need it for something, this way they are not paying more tax than they need to. Needless to say most of these people are pensioners, many of whom don't have vast savings, but just too much to claim benefits so are trying to make as much use of their money as possible. They can't afford the, long term, stocks and shares volatility, as they are older and possibly have need of the cash more quickly. Once again the government is forgetting its older members of society0
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chubsta said:Another point that keeps being mentioned is that it won’t affect money already in a cash isa - I wouldn’t trust this at all as the government can easily change the rules on anything they see fit so wouldn’t be surprised if they found some way around it.Governments of all types just seem to think our money is theirs and they can take it as they see fit.
Re my previous reply that is one of the reasons I'm keeping some cash 👍0
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