Martin Lewis: Is the £20,000 cash ISA limit about to be killed off?

wmb194

boingy said:

The funny thing about all this is that it seems to have come from city types pressurising the chancellor and persuading her that it will encourage more share investment and save the economy. In other words, it's come form an lobby group who stand to gain from such a change. Hands up if you think it will have any measurable effect on the economy.

It’s not the economy per se that they’re worried about, it’s that the LSE is slowly dying and they’re looking for a way to stimulate it. The original PEPs were restricted to London listed securities.

slinger2

Shylock_249 said:

Recharger said:

I hope Martin pursues this as much as possible with his normal vigour. On one hand governments want us to save for the future and have provided ISA's as a way of making some savings tax free. Now it appears that this government is going to make yet another big error and alienate even more people. Stocks and Shares ISA's are very useful for longer term gains, for those prepared to take a moderate element of risk and are to be recommended. For those who are risk averse and particularly those senior citizens (who don't have the luxury of the longer term savings) cash ISA's are a safe haven for some tax free gain. They should be looking at increasing, not decreasing the maximum allowed.
Given their mistakes on the low level of entitlement to the winter fuel allowance, possible changes to PIP and other disabled benefits, plus dragging pensioners into more and higher rate tax, lets hope they get a wake up call in the local elections and do not continue targeting those on lower and moderate incomes (which seems totally at odds with their ethics).
Any thoughts welcome!

One possible solution might be to allow the current 20k ISA rate to those at and above retirement age? 

In the last fy the wife and I converted our S&S ISAs into cash ISAs which we'd held for a number of years. At the age of 77 I'm certainly NOT going to start new S&S ISAs.  Fortunately we've always been able to take out cash ISAs of 20k each within the first few days of each financial year.  If the cash element is only 4k I certainly won't put 16k in S&S meaning that I'll be taxed on the interest for the 16k, so as I see it it's a win win for the government. 

Seems a pretty strange idea to me. The old people who've had a very generous allowance for donkeys years are allowed to have it going forward. But the young people who've never had the chance to save in an ISA are to penalised.

Would make much more sense to say that anyone over the state retirement age gets zero allowance.

If the government wants to rein in the overly generous benefit of ISAs, the simplest way is simply to cut the annual allowance. £20k down to £10k (say) from April 2026.

Hoenir

boingy said:

The funny thing about all this is that it seems to have come from city types pressurising the chancellor and persuading her that it will encourage more share investment and save the economy. In other words, it's come form an lobby group who stand to gain from such a change. Hands up if you think it will have any measurable effect on the economy.

I'd say primarily it's being viewed to raise tax revenue. What people do with their savings is entirely up to them. Give people a tax break they'll use it. What do you think cash savings in ISA's is used for by those that take the deposits?  Interest isn't a right needs to be earnt by lending the money out. 

eskbanker

slinger2 said:

Seems a pretty strange idea to me. The old people who've had a very generous allowance for donkeys years are allowed to have it going forward. But the young people who've never had the chance to save in an ISA are to penalised.

Would make much more sense to say that anyone over the state retirement age gets zero allowance.

Controversial stuff!  However, governments of all stripes are keen not to unnecessarily alienate the pensioners who form such an important part of the active electorate, so I'd be amazed if there was any such discriminatory policy contemplated....

Ultrasonic

I see no reason for pensioners to be treated differently to anyone else, either favourably or not.

Rather than focusing on the yearly amount that can be saved in cash ISAs, I actually wonder if just setting a limit on the total any individual can have in ISAs might make sense?

masonic

Ultrasonic said:

Rather than focusing on the yearly amount that can be saved in cash ISAs, I actually wonder if just setting a limit on the total any individual can have in ISAs might make sense?

ISTR a £100k cap was wheeled out as a Bogeyman previously, but was shot down relatively quickly.

friolento

Shylock_249 said:

Recharger said:

I hope Martin pursues this as much as possible with his normal vigour. On one hand governments want us to save for the future and have provided ISA's as a way of making some savings tax free. Now it appears that this government is going to make yet another big error and alienate even more people. Stocks and Shares ISA's are very useful for longer term gains, for those prepared to take a moderate element of risk and are to be recommended. For those who are risk averse and particularly those senior citizens (who don't have the luxury of the longer term savings) cash ISA's are a safe haven for some tax free gain. They should be looking at increasing, not decreasing the maximum allowed.
Given their mistakes on the low level of entitlement to the winter fuel allowance, possible changes to PIP and other disabled benefits, plus dragging pensioners into more and higher rate tax, lets hope they get a wake up call in the local elections and do not continue targeting those on lower and moderate incomes (which seems totally at odds with their ethics).
Any thoughts welcome!

One possible solution might be to allow the current 20k ISA rate to those at and above retirement age? 

In the last fy the wife and I converted our S&S ISAs into cash ISAs which we'd held for a number of years. At the age of 77 I'm certainly NOT going to start new S&S ISAs.  Fortunately we've always been able to take out cash ISAs of 20k each within the first few days of each financial year.  If the cash element is only 4k I certainly won't put 16k in S&S meaning that I'll be taxed on the interest for the 16k, so as I see it it's a win win for the government. 

Even though I am well above state pension age, I would definitely be against cutting a special deal for pensioners. We already have enough intergenerational conflict, we really don't need any more. Besides, on current track record, the likelihood that pensioners will get preferential treatment is next to nil.

Neversurrender

@slinger2

Seems a pretty strange idea to me. The old people who've had a very generous allowance for donkeys years are allowed to have it going forward. But the young people who've never had the chance to save in an ISA are to penalised.

Would make much more sense to say that anyone over the state retirement age

That's a pretty senseless comment.

Investing is for the longer term, Many older people rely on being able to keep cash invested with a guaranteed increase, which is important to at least make up for inflation, they also don't have the time ahead like younger people, and everyone knows,  that to invest in stocks and shares requires 5 years at the very least.

With that kind of investing at an older age, there would be many dying rich

Remember, there is little profit from saving in a cash ISA, as the interest mainly covers inflation, with a limit £4000 that would put more of the elderly into tax, eating away at any interest

slinger2

Neversurrender said:

@Hoenir

Seems a pretty strange idea to me. The old people who've had a very generous allowance for donkeys years are allowed to have it going forward. But the young people who've never had the chance to save in an ISA are to penalised.

Would make much more sense to say that anyone over the state retirement age

That's a pretty senseless comment.

Investing is for the longer term, Many older people rely on being able to keep cash invested with a guaranteed increase, which is important to at least make up for inflation, they also don't have the time ahead like younger people, and everyone knows,  that to invest in stocks and shares requires 5 years at the very least.

With that kind of investing at an older age, there would be many dying rich

Remember, there is little profit from saving in a cash ISA, as the interest mainly covers inflation, with a limit £4000 that would put more of the elderly into tax, eating away at any interest

I was simply pointing out the senselessness of the original idea: that pensioners should get preferential treatment regarding cash ISAs.

masonic

After 8 pages, the good old British ISA is starting to sound more appealing.