Reeves' ISA review

eskbanker

Sea_Shell said:

Can we also assume that flexible cash ISAs will retain the ability to replace any withdrawn cash back into them (both current and previous years contributions) during the tax year.

Since the only way of withdrawing from a flexible ISA is to remove cash that's already in there, then I can't see any reason why there'd be an issue with replenishing it.

jrawle

eskbanker said:

Mistermeaner said:

also how would one go about trading? I have just sold 20K of a fund in my S&S isa with a view to buying another but will short term hold 20K of cash  

But, as above, the new limit relates to how much cash can be contributed to ISAs, not how much can be held in them (however temporarily), so it's all about controls on depositing the money rather than what happens to it subsequently, although there'd obviously need to be something preventing blatant abuse.

They can simply say that interest paid on cash in a S&S ISA is subject to tax in the usual way. There's nothing to stop you holding it, but you will either not earn any interest, or if you do, it's not tax-free.

eskbanker

jrawle said:

eskbanker said:

Mistermeaner said:

also how would one go about trading? I have just sold 20K of a fund in my S&S isa with a view to buying another but will short term hold 20K of cash  

But, as above, the new limit relates to how much cash can be contributed to ISAs, not how much can be held in them (however temporarily), so it's all about controls on depositing the money rather than what happens to it subsequently, although there'd obviously need to be something preventing blatant abuse.

They can simply say that interest paid on cash in a S&S ISA is subject to tax in the usual way. There's nothing to stop you holding it, but you will either not earn any interest, or if you do, it's not tax-free.

Why would they do that, given that the new rules allow £12K of cash to be subscribed annually to S&S ISAs, or rather £20K, of which £8K must then be invested?

Mistermeaner

Guess we need to wait for the details , all
seems potentially complex and equally pointless 

Grumpy_chap

SnowMan said:

In the speech:

Cash ISA annual contribution limit 12K. 

Doesn't apply to over 65s (who retain full 20K limit)

Overall 20K allowance remains subject to the cash ISA limit. 

It seems like it just adds an extra complexity that everyone could do without.
Plus, creating increased inter-generational differences.
And why is the increased cash-ISA limit set at 65 years old?  That is not even aligned with current SPA (66) and, by the time the change comes into effect (2027), SPA will have increased further to 67.

Kim_13

Grumpy_chap said:

SnowMan said:

In the speech:

Cash ISA annual contribution limit 12K. 

Doesn't apply to over 65s (who retain full 20K limit)

Overall 20K allowance remains subject to the cash ISA limit. 

It seems like it just adds an extra complexity that everyone could do without.
Plus, creating increased inter-generational differences.
And why is the increased cash-ISA limit set at 65 years old?  That is not even aligned with current SPA (66) and, by the time the change comes into effect (2027), SPA will have increased further to 67.

An admission that they don’t really think SPA should be higher than 65, but it has to be out of financial necessity? On that basis I would have made it 60, as those in physical and driving jobs (Group 2 licences) in particular might struggle to get to SPA and need the funds to bridge the gap. There’s a logic to 60 in that it qualifies for free prescriptions in England.

Ceejay3000

Grumpy_chap said:

SnowMan said:

In the speech:

Cash ISA annual contribution limit 12K. 

Doesn't apply to over 65s (who retain full 20K limit)

Overall 20K allowance remains subject to the cash ISA limit. 

It seems like it just adds an extra complexity that everyone could do without.
Plus, creating increased inter-generational differences.
And why is the increased cash-ISA limit set at 65 years old?  That is not even aligned with current SPA (66) and, by the time the change comes into effect (2027), SPA will have increased further to 67.

Well for a start 65 was what Martin was calling for. It is unreasonable to be requiring anyone to invest in stocks and shares only 2 years before state pension age because if the market goes down you have little chance of recovery in that timescale. So IMHO that is a good reason to set the cut off as SPA-2.

eskbanker

Ceejay3000 said:

Grumpy_chap said:

SnowMan said:

In the speech:

Cash ISA annual contribution limit 12K. 

Doesn't apply to over 65s (who retain full 20K limit)

Overall 20K allowance remains subject to the cash ISA limit. 

It seems like it just adds an extra complexity that everyone could do without.
Plus, creating increased inter-generational differences.
And why is the increased cash-ISA limit set at 65 years old?  That is not even aligned with current SPA (66) and, by the time the change comes into effect (2027), SPA will have increased further to 67.

Well for a start 65 was what Martin was calling for. It is unreasonable to be requiring anyone to invest in stocks and shares only 2 years before state pension age because if the market goes down you have little chance of recovery in that timescale. So IMHO that is a good reason to set the cut off as SPA-2.

But by that logic SPA-5 or SPA-10 would have been more justifiable?

Kim_13

eskbanker said:

Ceejay3000 said:

Grumpy_chap said:

SnowMan said:

In the speech:

Cash ISA annual contribution limit 12K. 

Doesn't apply to over 65s (who retain full 20K limit)

Overall 20K allowance remains subject to the cash ISA limit. 

It seems like it just adds an extra complexity that everyone could do without.
Plus, creating increased inter-generational differences.
And why is the increased cash-ISA limit set at 65 years old?  That is not even aligned with current SPA (66) and, by the time the change comes into effect (2027), SPA will have increased further to 67.

Well for a start 65 was what Martin was calling for. It is unreasonable to be requiring anyone to invest in stocks and shares only 2 years before state pension age because if the market goes down you have little chance of recovery in that timescale. So IMHO that is a good reason to set the cut off as SPA-2.

But by that logic SPA-5 or SPA-10 would have been more justifiable?

Martin’s logic might have been it’s even more inappropriate for those aged 80+ to be subject to the changes, but if I start too low I’ll get nothing (as indeed he has been campaigning for a removal of the LISA penalty for over the limit properties/a threshold increase, for almost three years.) The next step might be well if LISA is accessible penalty free at 60, shouldn’t that be the point at which the Cash ISA restrictions no longer apply? If Lifetime ISA is being replaced then that age is less likely to go up to 65 instead.

bristolleedsfan

Kim_13 said:

Grumpy_chap said:

SnowMan said:

In the speech:

Cash ISA annual contribution limit 12K. 

Doesn't apply to over 65s (who retain full 20K limit)

Overall 20K allowance remains subject to the cash ISA limit. 

It seems like it just adds an extra complexity that everyone could do without.
Plus, creating increased inter-generational differences.
And why is the increased cash-ISA limit set at 65 years old?  That is not even aligned with current SPA (66) and, by the time the change comes into effect (2027), SPA will have increased further to 67.

There’s a logic to 60 in that it qualifies for free prescriptions in England.

They are thinking about upping age for free prescriptions to 66  https://assets.publishing.service.gov.uk/media/60e455b08fa8f50c7683861d/changes-to-giving-free-prescriptions-to-people-aged-60-and-over_easy-read.pdf