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

Grumpy_chap

Olenna said:

As for the ISA issue, it's fairly simple -  simply merge all the cash/lifetime ISA limits into a single limit matching the FSCS cap (circa €100k per person) with anything above taxable in the normal way. 

Well, it is not simple as such a cap would be an effective retrospective change.
There are people for whom the ISA-vehicle has been used as an alternative to pensions as a means to provide for retirement

InvesterJones

Olenna said:

As for the ISA issue, it's fairly simple -  simply merge all the cash/lifetime ISA limits into a single limit matching the FSCS cap (circa €100k per person) with anything above taxable in the normal way. 

Do you mean a capital limit? How would you treat an existing stocks and shares ISA investment of £200k? Force a sale?

Exodi

InvesterJones said:

Olenna said:

As for the ISA issue, it's fairly simple -  simply merge all the cash/lifetime ISA limits into a single limit matching the FSCS cap (circa €100k per person) with anything above taxable in the normal way. 

Do you mean a capital limit? How would you treat an existing stocks and shares ISA investment of £200k? Force a sale?

I interpreted it that you'd just lose the tax-free status on anything above £85k, not that you couldn't put more than that in (which would be impractical due to investment growth). So by what they said, someone with a S&S ISA of £200k would suddenly find the tax wrapper removed on 57.5% of their pot.

Or alternatively apply these rules on new contributions only, and add it to the never-ending list of things the younger generation won't have access to that the older generation did.

mebu60

Martin also championed the lower of a pounds and pence increase or inflation linked increase if not a ban, but Ofcom are too weak. Sometimes policies have unintended consequences and we need people who identify them and include measures to prevent those consequences.

For unintended consequences (albeit predictable) look at the introduction of competition in the energy sector combined with regulatory oversight failure combined with Mr Milliband's price cap and rising global prices. We're all now paying the price literally every day in the electricity standing charge. And Martin is now campaigning for a 'no standing charge' tariff which isn't any such thing but a transfer of the standing charge to a unit cost. Rather than campaigning for components of the standing charge such as the bale out costs to be stripped out and funded centrally (which we will still pay one way or another but less of a burden on the less well off).

While I'm at it, a non-Martin example, football on tv, removing Sky's monopoly to increase competition. Now three subscriptions are required, Sky/Now, TNT and Amazon, and prices are inflated by the fact that they have to outbid each other for tv packages to show. And it's not real competition, you can't choose which of the three to watch a selected match, you can only view it on the streamer which is covering the match.

Unfortunately it seems to be that the people who attempt to identify potential unintended consequences and suggest measures to mitigate them are labelled as negative 'doomsters' and 'gloomsters' (ABdPJ - July 2019).  

gt94sss2

Hoenir said:

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. 

https://www.gov.uk/government/statistics/annual-savings-statistics-2024/commentary-for-annual-savings-statistics-september-2024

Kim_13

It wouldn’t surprise me if this excerpt was taken as indicating a problem, when really the time of rising rates is the time to subscribe to Cash ISAs (especially if they are fixed and therefore guarantee an interest rate at more than the inflation target.) 2022/2023 was my first Cash ISA, as rates had been uninspiring until that point (I was not old enough pre the financial crash.)

“Chart 1 below shows that around 12.4 million Adult ISA accounts were subscribed to in 2022 to 2023, up from 11.8 million in 2021 to 2022. Similarly, the number of cash ISAssubscribed to increased by 722,000.”

Kennington70

This idea is a car crash waiting to happen.  Millions of people are already investing in the markets through their pensions.  They do so with little or no knowledge of investing, including charges, risk factors and investment returns.  Do we seriously think that millions of people are actually going to actively track their investments to maximise their returns   The first sign of a market crash would lead to panic moves.  This plus the 7-10 day delay before funds would arrive would see negative headlines everywhere.  With a touch cynicism I can already see lawyers looking for weaknesses to exploit in class action suits similar to recent bank scandals.

The existing limit may seem unachievable to most people but older generations with cash from pensions or house sales need a place to put the funds to give them instant access as they approach the final part of their lives.  This includes saving for end of life expenses

.  

booneruk

Kennington70 said:

This idea is a car crash waiting to happen.  Millions of people are already investing in the markets through their pensions.  They do so with little or no knowledge of investing, including charges, risk factors and investment returns.  Do we seriously think that millions of people are actually going to actively track their investments to maximise their returns   The first sign of a market crash would lead to panic moves.  This plus the 7-10 day delay before funds would arrive would see negative headlines everywhere.  With a touch cynicism I can already see lawyers looking for weaknesses to exploit in class action suits similar to recent bank scandals.>

If we all stuck to cash we'd generally be a lot poorer

The existing limit may seem unachievable to most people but older generations with cash from pensions or house sales need a place to put the funds to give them instant access as they approach the final part of their lives.  This includes saving for end of life expenses

Normal savings accounts are available.

Area88

I’m literally counting down to the announcement with fear and grimace. 

jimjames

Area88 said:

I’m literally counting down to the announcement with fear and grimace. 

That's probably the intention then when the announcement isn't as bad as predicted everyone will be relieved