Reeves' ISA review

rallycurve

slinger2 said:

For me, as a 20% tax pater who's over the tax-free £1k savings allowance, the 2% extra tax will work out as a cut of about 0.1% in the interest rate. 80% of 5% = 4%, 78% of 5% = 3.9%. Probably the anticipated 0.25% cut in the base rate next month will be a bigger effect.

And that will be less than 0.1% when the interest rates inevitably come back down

80% of 3%: 2.4%
78% of 3%: 2.34%

Mistermeaner

what a poorly thought out change the 12K cash isa limit is. Firstly exempting over 65's is just cowardice, great for them but the nation needs its wealthy pensioners spending not hording. Secondly its utterly pointless as anyone vaguely informed would know that they can just get a cash isa equivalent fund within a S&S isa wrapper anyway e.g. short term money markets (loads of them available). Wonder who comes up with this garbage

Ocelot

I'm getting emails about it already. From YBS:

From 6 April 2027, the annual tax-free limit for Cash ISAs will reduce from £20,000 to £12,000 for savers under 65. 

Standing up for members

We know how important these allowances are to our members, which is why we campaigned hard to keep them as high as possible. While we’re disappointed to see the Cash ISA limit reduced, we’re pleased the Chancellor listened to calls from us and the wider mutual sector not to cut it dramatically.

 Good news for over-65s

The £20,000 Cash ISA allowance will remain for those aged 65 and over, giving flexibility for retirement planning.

eskbanker

Only just noticed that the budget document refers to "ISA cash" limit of £12K, not "cash ISA" limit:

From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000.

i.e. unless that's a mistake, it includes cash within S&S ISAs, however that would be monitored!

MeteredOut

Mistermeaner said:

what a poorly thought out change the 12K cash isa limit is. Firstly exempting over 65's is just cowardice, great for them but the nation needs its wealthy pensioners spending not hording. Secondly its utterly pointless as anyone vaguely informed would know that they can just get a cash isa equivalent fund within a S&S isa wrapper anyway e.g. short term money markets (loads of them available). Wonder who comes up with this garbage

Anyone vaguely informed would also know that these sort of money funds were previously excluded from ISAs (or equivalents) and will very likely be excluded again. 

fiddlesticks0

Albermarle said:

fiddlesticks0 said:

Given there's nearly a year and a half until this comes into effect, I wounder what the odds are on this proposal being scrapped before it happens. 

I take it the proposed change doesn't just refer to UK stocks - aren't they generally doing & forecast to continue doing badly, along with pretty much everything else in this country? I thought this was one proposal that was being talked about at some stage, but i could be wrong. Given I know so little about S&S and am risk averse, I highly doubt I'll be one of those people to be nudged into putting the remaining 8k allowance into these. Hopefully enough people will voice the same sentiment and we'll have another u-turn.

Update (from Reuters) 'Analysts, meanwhile, say hopes the money will be invested in Britain may be misplaced if savers instead choose better-performing overseas markets.'

I think the  'investing in Britain' part is only part of the logic. It is also  that long term investments normally grow a lot more than cash savings, so it is trying to nudge a reluctant nation into not being frightened of investing for their own good ( similar to the advice which is often doled out in these forums) .
The public is woefully uneducated on all personal finance matters and many have no idea how/why/what their pensions are invested in.
However there will be many people resistant to the idea ( like yourself ) and I guess most people who are comfortable with investing will already have done so anyway, so it might get scrapped in the end.

I take it the proposed change doesn't just refer to UK stocks - aren't they generally doing & forecast to continue doing badly, along with pretty much everything else in this country?

In the last few years UK stocks have generally underperformed the main US market, but have been doing rather well recently. The FTSE 100 is up 18.5% since January 1st . 

Media report of the stock market tends to sensationalise any drops and not mention any steady rises.

Thanks, given as mentioned I know nothing about S&S but I suspect most people know investments do well long-term, yet so many of us just don't want the risk. I'd imagine that re the historical picture, I'd be worried that it's not a reliable predictor of future performance, especially as we're currenty in a massive time of change and 'disruption' in all kinds of sectors, and who knows what effects AI, for example, is going to have. All this of course may have no ill effects and those stocks may just continue to rise, but I wouldn't really want to be worrying about the fluctuations, when there's a less stressful 'safer' alternative in the form of fixed savings that although haven't done anything spectatular over the decades, they've served me relatively well.

Mistermeaner

MeteredOut said:

Mistermeaner said:

what a poorly thought out change the 12K cash isa limit is. Firstly exempting over 65's is just cowardice, great for them but the nation needs its wealthy pensioners spending not hording. Secondly its utterly pointless as anyone vaguely informed would know that they can just get a cash isa equivalent fund within a S&S isa wrapper anyway e.g. short term money markets (loads of them available). Wonder who comes up with this garbage

Anyone vaguely informed would also know that these sort of money funds were previously excluded from cash ISAs (or equivalents) and will very likely be excluded again. 

hi is there a typo in there? I presume you mean were previously excluded from S&S Isa's? if so that's interesting i was not aware of this

Mistermeaner

eskbanker said:

Only just noticed that the budget document refers to "ISA cash" limit of £12K, not "cash ISA" limit:

From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000.

i.e. unless that's a mistake, it includes cash within S&S ISAs, however that would be monitored!

per my other post does that preclude using a cash equivalent fund (e.g. short term money markets or other SONIA trackers)... that is very different from holding cash within a S&S isa

MeteredOut

Mistermeaner said:

MeteredOut said:

Mistermeaner said:

what a poorly thought out change the 12K cash isa limit is. Firstly exempting over 65's is just cowardice, great for them but the nation needs its wealthy pensioners spending not hording. Secondly its utterly pointless as anyone vaguely informed would know that they can just get a cash isa equivalent fund within a S&S isa wrapper anyway e.g. short term money markets (loads of them available). Wonder who comes up with this garbage

Anyone vaguely informed would also know that these sort of money funds were previously excluded from cash ISAs (or equivalents) and will very likely be excluded again. 

hi is there a typo in there? I presume you mean were previously excluded from S&S Isa's? if so that's interesting i was not aware of this

Yes, thanks. Corrected.

eskbanker

Mistermeaner said:

eskbanker said:

Only just noticed that the budget document refers to "ISA cash" limit of £12K, not "cash ISA" limit:

From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000.

i.e. unless that's a mistake, it includes cash within S&S ISAs, however that would be monitored!

per my other post does that preclude using a cash equivalent fund (e.g. short term money markets or other SONIA trackers)... that is very different from holding cash within a S&S isa

I don't think there's been anything like enough detail published yet to answer that!