Reeves' ISA review

Ceejay3000

You could argue for 57 as that is the new age at which people can draw a private pension. But that would be bad optics as the vast majority cannot dream of retiring at 57, and those that can will probably still have the means to be investing.

SnowMan

bristolleedsfan said:

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

Where does that come from? I know it was consulted on in 2023 and they decided to keep the age for free prescriptions at 60. Is that document from that consultation. I thought Labour had said they had no plans to change it either?

Ocelot

SnowMan said:

bristolleedsfan said:

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

Where does that come from? I know it was consulted on in 2023 and they decided to keep the age for free prescriptions at 60. Is that document from that consultation. I thought Labour had said they had no plans to change it either?

As far as I can tell, that document is from the 2021-23 consultation.

Albermarle

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.

Unless you are planning to buy an annuity, it is normally advised to keep invested ( your pension for example) well into your 70's/early 80's,  although some dialling down of the risk level could be appropriate.
The reason is of course, you will not suddenly want to withdraw all your money on the day you reach state pension age, but want it to last for another 20 or 30 years. In which case staying at least partly invested, rather than just holding cash, means it is less likely you will run out, and/or you can take an higher income. 

gt94sss2

Cash within Stocks & Shares ISAs will be subject to a charge by HMRC to stop circumventing on Cash ISA limits. Tests for "cash like" may capture money market and ultra short duration bonds. 

https://www.gov.uk/government/publications/tax-free-savings-newsletter-19/tax-free-savings-newsletter-19-november-2025

ivormonee

gt94sss2 said:

Cash within Stocks & Shares ISAs will be subject to a charge by HMRC to stop circumventing on Cash ISA limits. Tests for "cash like" may capture money market and ultra short duration bonds. 

Thanks for posting. I also came here to post similar info. I just read in the media. Here is what it says:

HMRC has also revealed it plans to ban “cash-like” investments from being held in stocks and shares Isas, in the most dramatic shake-up to Isa eligibility rules in recent years.

Transfers from a stocks and shares or innovative finance Isa into a cash Isa will be banned under the new rules.

It is currently unknown how HMRC will determine whether an investment is “cash-like”, although the tax authority has confirmed in its savings newsletter that a “test” will be developed in consultation with the financial industry.

It raises concerns that investments such as money market funds may be effectively banned from stocks and shares Isas. These funds, which aim to offer a slightly higher return than cash at low risk, are often used by investors who are seeking new opportunities to buy stocks.

There is a risk that even short-dated bonds might be penalised by the taxman, which includes UK government debt and the most stable company debt. 

I am left wondering how complex they are going to make ISAs now. I am also concerned about the restrictions in S&S ISAs where we may be banned in holding our money market funds, and being penalised with a penalty by HMRC if we include them, (all of which they will track through the ISA reporting by providers to HMRC).

I have a feeling it could get very messy.

If the idea behind the reduction in the cash ISA limit was to force us to invest in UK equity, banning us from being able to invest in money-market funds in an S&S ISA is equally unlikely to make us want to invest in equity unless we were already potentially inclined to do so. This is likely to foster deep resentment for what is clearly a disguised tax-raising measure by the chancellor and nothing to do with investing for growth. 

slinger2

What I find bizarre is that when you get to 65, you'll not only be able to put your £20k into Cash ISAs but you'll be able to move all your S&S ISA money to Cash ISAs too. Not sure why they chose 65 when the pension age is just about to rise from 66 to 67.

Thankfully (he says with a certain amount of irony) me and my OH are both over 65 and are not directly affected by the new rules.

eskbanker

ivormonee said:
This is likely to foster deep resentment for what is clearly a disguised tax-raising measure by the chancellor and nothing to do with investing for growth. 

Not sure there was any meaningful attempt to disguise this budget being all about raising tax, although inevitably there were all the usual platitudes to sell it.

slinger2

Of course, in the long run, one of the biggest "changes" is simply not increasing the allowance. The CPI was 102.9 in April 2017, its now about 140 and likely to be over 160 before there's any increase.

Aretnap

ivormonee said:

gt94sss2 said:

Cash within Stocks & Shares ISAs will be subject to a charge by HMRC to stop circumventing on Cash ISA limits. Tests for "cash like" may capture money market and ultra short duration bonds. 

Thanks for posting. I also came here to post similar info. I just read in the media. Here is what it says:

HMRC has also revealed it plans to ban “cash-like” investments from being held in stocks and shares Isas, in the most dramatic shake-up to Isa eligibility rules in recent years.

Transfers from a stocks and shares or innovative finance Isa into a cash Isa will be banned under the new rules.

It is currently unknown how HMRC will determine whether an investment is “cash-like”, although the tax authority has confirmed in its savings newsletter that a “test” will be developed in consultation with the financial industry.

It raises concerns that investments such as money market funds may be effectively banned from stocks and shares Isas. These funds, which aim to offer a slightly higher return than cash at low risk, are often used by investors who are seeking new opportunities to buy stocks.

There is a risk that even short-dated bonds might be penalised by the taxman, which includes UK government debt and the most stable company debt. 

I am left wondering how complex they are going to make ISAs now. I am also concerned about the restrictions in S&S ISAs where we may be banned in holding our money market funds, and being penalised with a penalty by HMRC if we include them, (all of which they will track through the ISA reporting by providers to HMRC).

I have a feeling it could get very messy.

Nah. There are already plenty of investment types that are not eligible to be held within an ISA - shares listed on some of the less mainstream stock exchanges for example. You don't get penalized for buying then without realising that they are not ISA eligible - you just can't buy then within an ISA. They don't appear on the menu when you click "buy". 

This will just add a few more funds/securities to the set that only show up on the menu when you're logged in to your general investment account, not your ISA.

There was a similar rule in place until 2014 - the test was whether there was a realistic possibility of the investment losing 5% of it's value over a 5 year period. Obviously there were a few edge cases, but mostly it was obvious. Money market funds, gilts with <5 years to run (or funds made up mainly of such gilts) were ineligible; longer dated gilts and probably all but a handful of very safe, very short-dated, corporate bonds would pass the test. I presume the new test will be very similar, if not identical.