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

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.

Beddie

I'm fine with it changing, though would prefer the total to stay, but less in cash as has been mooted.

What will be will be. Labour have quickly fallen into the "tax the rich" mentality even though wealthy people, and their taxes, are leaving in droves.

Will they see sense? Nah.

artyboy

Interesting comments about potential 'cash like' investments like STMMFs becoming ineligible. I wonder how on earth that could actually be applied in practice, especially when you have things like CSH2 out there, which is an entirely synthetic attempt to replicate STMMF performance though a swap-based arrangement.

Does anyone really think THIS government is smart enough to close off all lower risk avenues here? They could I suppose go "total blunt instrument" and say something really dumb like only FTSE100/250 listed companies qualify, but even I doubt that.

I could also see a lot more S&S ISA providers offering tempting rates for "temporarily" uninvested cash.

(And this sort of nonsense just makes me regret even more missing the boat on Portugal's very generous expat scheme... I mean how is anyone meant to do any sensible long term financial planning in the UK any more...)

Manlyhealth

As Martin has hinted, there are ways of holding cash in a Stocks & Shares ISA, such as money market funds (e.g. Vanguard, Royal London) which can be both accumulation and income. As usual, it will be the less knowledgable and sophisticated saver who will lose out. Caveat servator.

booneruk

Beddie said:

I'm fine with it changing, though would prefer the total to stay, but less in cash as has been mooted.

I too am very relaxed with this type of proposal. The majority of my ISA money goes into S&S since I have a longer term view. What cash I have in ISAs already represents ~10% of my saved wealth which is a reasonable enough amount.

People can still invest in premium bonds, use their savings allowances and go into short dated gilts if they need to - or even (shock, horror) pay a slither of tax on their interest in everyday savings accounts. No one's stopping them saving cash.

friolento

People can still invest in premium bonds,  

“invest” in Premium Bonds 🤣

As long as such propositions are bandied about, even  in an MSE Forum, what hope is there that the average UK adult would have what it takes to make actual investment decisions?

Hoenir

Grumpy_chap said:

Hoenir said:

those who subscribe the maximum every year. 

I do not have any data.
How many actually subscribe the maximum £20k per year?

The data exists. 

dunstonh

Manlyhealth said:

As Martin has hinted, there are ways of holding cash in a Stocks & Shares ISA, such as money market funds (e.g. Vanguard, Royal London) which can be both accumulation and income. As usual, it will be the less knowledgable and sophisticated saver who will lose out. Caveat servator.

Apart from multiple threads already going, your info may not turn out to be correct.

In the past, S&S ISAs and PEPs could not hold cash or cash like investments long term.  Investments like RL STMM were not allowed in them.  ISINs would be blacklisted for inclusion in the PEP/ISA.  Cash held directly was taxed within the ISA.

The mechanisms existed then and could be put back in place just as easily.

booneruk

friolento said:

People can still invest in premium bonds,  

“invest” in Premium Bonds 🤣

As long as such propositions are bandied about, even  in an MSE Forum, what hope is there that the average UK adult would have what it takes to make actual investment decisions?

My mistake indeed! I'm very aware cash isn't investing. I must have read too many of the wrong kind of posts here

gilesco

friolento said:

People can still invest in premium bonds,  

“invest” in Premium Bonds 🤣

As long as such propositions are bandied about, even  in an MSE Forum, what hope is there that the average UK adult would have what it takes to make actual investment decisions?

Yes, it staggers me to discover how highly risk averse people are in general in the UK. I used to be very much the opposite, and have sometimes felt the bite of poor risk management, but after a few reads I'm a lot more confident in knowing what parts of my portfolios have risk and return, and what parts are low-risk. A lot of risk averse people chant about Investments not having FSCS protections, and while I get that, you only need to retain a certain amount under that protection, and any money that you won't be needing in the next 2 years is always going to be better invested than saved.

A couple of reads that I found very useful during my learning curve:

The DIY Investor by Andy Bell
https://www.amazon.co.uk/DIY-Investor-3rd-financially-investments/dp/0857198181

The Meaningful Money Retirement Guide by Pete Matthew
https://www.amazon.co.uk/dp/1804090654?ref=ppx_yo2ov_dt_b_fed_asin_title

Also - use the money helper service (for over 50s) it is not just about retirement, it's about preparing to be financially ready for it, and that won't happen if they keep their head in the sand.
https://www.moneyhelper.org.uk/en/pensions-and-retirement

I know some are sceptical about using a "Financial Planner" or "Wealth Management", but if you don't have time to read books like the above and/or book your appointment with moneyhelper.org.uk (when the time comes) and you have more than 2 years worth of retirement income in cash then a Financial Planner and/or a Wealth Management outfit is probably the way to go.