Martin Lewis: Cash ISA limit could be cut – this is 'p*ss people off economics'

Grumpy_chap

kimwp said:

You could lose your entire savings. 

Yes, but will those that have been encouraged to move from safe cash savings to stock market be in funds that have that level of risk?  
One assumes that the banks will create extremely low risk - almost cash-like safety - stock market based portfolios.
The issue will arise when those people that have been nudged into these extremely low risk stock market portfolios realise how low the returns are even if there has been a boom.  No doubt, it will give another opportunity for the mis-selling merchants.  

Were you expecting infinite riches for no risk on your £5k ISA?
Has it only now increased in value up to £5,100 after 5 years?
Call 0800-ISACLAIM now!

Shylock_249

Farway said:

kimwp said:

Jonesy214eva said:

So, I do a little bit of investing in stocks and shares with cash i can afford to lose. I put my savings in to a cash ISA. If i put my savings in to a S&S ISA, will my savings value go down? Or is just the rate of return/interest that fluctuates?

You could lose your entire savings. 

You are correct, and the unfortunate thing is many who may be tempted with S & S ISA will be blissfully unaware of this & just see the glossy returns

A disaster in the making as newbies loose it all to those who will certainly be after cash ISA money

Exactly, remember Rail Track?

Cobbler_tone

Considering even halving the ISA limit will only raise around £1b, I think the most likely change will be to extend the tax thresholds for another couple of years. You'd hope they won't go against their previous promises on the other taxes.

Middle_of_the_Road

Jonesy214eva said:

So, I do a little bit of investing in stocks and shares with cash i can afford to lose. I put my savings in to a cash ISA. If i put my savings in to a S&S ISA, will my savings value go down? Or is just the rate of return/interest that fluctuates?

Buying a few well known stocks and shares is just gambling. Investing is for the long term. Usually decades.

This is why there is so much concerns about the proposed changes. Expecting the general public to commit their savings to the stock market.

If you put your savings into a S&S ISA, they are no longer savings, they are investments.

Their value will be continually fluctuating.
You don't get interest on investments, you usually get paid dividends, which can be paid out to you, or reinvested.

If you needed to cash in the funds at a time when their value had gone down you would get back less than you put in.
In the worst case, you could lose most of it. 

Hoenir

westv said:

This all sounds like a government kite flying exercise.
Or it could just be the media making up stories - as they always do with the 25% pension tax free lump sum.

As informative as the coverage of Trump's tariff plans. The best commentary I've listened to. Suggested Trump is totally right in his objectives simply wrong in how he's going about it. 

gilesco

You can still buy low risk money market funds in a stocks and shares ISA. These tend to be highly liquid, low risk funds. The return on these is comparable or better to the loss in real terms you will make on most cash ISAs.
Personally I would abolish all Cash ISAs, force stocks and shares providers to pay at least BoE rate on cash held in stocks and shares ISAs and increase the allowance to £25k per year.

Hoenir

gilesco said:

You can still buy low risk money market funds in a stocks and shares ISA. These tend to be highly liquid, low risk funds. The return on these is comparable or better to the loss in real terms you will make on most cash ISAs.
Personally I would abolish all Cash ISAs, force stocks and shares providers to pay at least BoE rate on cash held in stocks and shares ISAs and increase the allowance to £25k per year.

Buy short dated Government Gilts. That will help keep the cost of servicing the UK's debt lower . 

What's most telling is that of those who subscribe the maximum every year. Around 60% earn more than a £150k a year. 

gilesco

Hoenir said:

What's most telling is that of those who subscribe the maximum every year. Around 60% earn more than a £150k a year. 

They shouldn't really care where the new investment comes from - the stated target is to increase the total investment. Your best bet to successfully do that is to target those who have the cash and have the risk appetite.

Section62

Shylock_249 said:

mebu60 said:

Shylock_249 said:

Middle_of_the_Road said:

Shylock_249 said:

Whatever decision Rachel Reeves makes on 15th of July I think it very unlikely that she'll change her mind and reverse the decision. There's only so many U-Turns a government can do and I don't think this would be one of them.

You're obviously not a betting individual 😄

Agreed, but I bet there won't be a lot of investors voting Labour at the next election who have put the remainder of their ISA allowance (expecting it to be 16k) into S&S for the next 4 years when their individual valuation is much less than the 64k they invested.  Yes, I do realise the value could go up BUT 4 years isn't a long time in investment terms.

Except I don't think many folk will be nudged, especially if STMMFs are made ineligible, and the funds will be just be placed in taxable savings accounts - maybe that's the cunning plan behind all this!! 

Exactly, take for example one could have saved the 16k at 4.5% = £720 interest free.  That £720 would be notified to HMRC and liable to tax at 20%, ie £144.oo.

Me and my wife have always put the maximum amount (20k) into fixed rate ISAs within the first few days of the new FY so we will be £288.oo worse off because at the age of 77 & 75 we are certainly NOT going to invest in S&S ISA. And we won't get the Winter Fuel Allowance either because that will be clawed back by Rachel too.....

My Suggestions (Minister of Good Ideas!):
Allow pensioners to retain the current 20k rate. 
Allow pensioners like myself and wife who don't have any children to merge ISAs into a Joint Pensioners' ISA, thereby avoiding probate on the death of one of us.

A civil servant in the Ministry of Good Ideas asks: "How do you intend to define 'pensioners'?  And you're aware that will be a brave decision, Minister?"

Grumpy_chap

Hoenir said:

those who subscribe the maximum every year. 

I do not have any data.
How many actually subscribe the maximum £20k per year?
I suspect it is quite a low number compared to those who may use the maximum on a one-off or occasional basis, perhaps after some life event which (even if unfortunate in other ways) results in the individual receiving a one-off larger cash lump sum.  Redundancy would be one such example.

For the Government, there is a benefit to individuals saving and, if an individual can use the £20k lump sum on a one-off basis, there is a saving to the Government in that individual now having resilience for any financial shocks along the way and not needing to immediately claim benefits if a rainy day arrives.