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

kimwp

InvesterJones said:

kimwp said:

It's completely bonkers, there are people who need to have a large cash buffer to protect them against the market lows - retired people and other people who want to save up to not work for a while. 

How will it work if you have stocks and shares ISAs and sell them, does it have to come out of the ISA wrapper if it's more than you can add to a cash ISA that year? I can only see it making the rules more complicated - and as Martin says in his article, things will rebalance with more cash-like offerings in stocks and shares ISAs, but the general public won't understand them. There's already a tax advantage (capital gains allowance) of investing - far better (if wanting to increase investing), to push that back up again, so more experienced investors are drawn to those and less sophisticated/cautious savers don't have to risk their life savings.

Remember the savings themselves are not taxed. Only the income they generate. People without other incomes can earn a large amount of interest before it starts to be taxed.

Oh, good point, I'd forgotten about the savings allowance for low earners.

kempiejon

@phlebas192 Thank you very much for prompting my memory, that's very famaliar with dividends taxed at source with something like a voucher.

1983Butlins

Unless you are a younger person or a business person able to invest in a S&S Isa, as the normal advise is to invest for at least 10 years as the cash can go up and down but over a period should makes some gains. But as for Pensioners it feels like another dig at them, a pensioner aged 70+ is not going to invest in a S&S Isa as it's more likely to loose money or be scammed, I think that Reeves just sees peoples savings which has happened over years of Save, Save, Save  as an easy target, many years ago the Gov said save your cash as there is no guarantee there will be a pension to live off, that's what people have done and now feels like we are being penalized for it. She is forgetting that Pensioners have invested into NHS and paid their taxes etc already over the years, so why target them again an again.

friolento

daveyjp said:

Just set a maximum limit for cash which can be held in ISAs.  Make it high enough to accommodate anyone who wants lower risk - £250k will fund a decent retirement income.    There's a limit for Premium Bonds and no one is moaning it should be higher.

Your understanding of "decent" does not tally with mine. Particularly not in a falling interest rate and high cost of living environment, few NHS dentists, and terrible GP/NHS service which drives people towards private services.

 

friolento

phlebas192 said:

For the vast majority of people who can afford to save more than a few £k, then once they have more than £20k (basic rate taxpayer so no ISA needed) or £50k (higher rate so use PBs) then it would make much more sense to invest in equities. 

This might be the right thing for you to do but it most certainly is not for me, or for many other pensioners. Nobody will encourage, let alone force, me to invest any more in equities. I have been winding down my equity investments for years, in line with my declining investment horizon duration.

Hoenir

friolento said:

daveyjp said:

Just set a maximum limit for cash which can be held in ISAs.  Make it high enough to accommodate anyone who wants lower risk - £250k will fund a decent retirement income.    There's a limit for Premium Bonds and no one is moaning it should be higher.

Your understanding of "decent" does not tally with mine. Particularly not in a falling interest rate and high cost of living environment, few NHS dentists, and terrible GP/NHS service which drives people towards private services.

 

What pays for these services? Tax revenue. Like the politics in the USA currently. No one has the balls to stand up and actually tackle the issues head on. Instead there's constant pandering to retain control of their own backsides.  Kicking the cans can only ever last so long..... 

Suspect many never though that would have to repay their covid furlough handout's. Printing money is never free. 

friolento

Hoenir said:

friolento said:

daveyjp said:

Just set a maximum limit for cash which can be held in ISAs.  Make it high enough to accommodate anyone who wants lower risk - £250k will fund a decent retirement income.    There's a limit for Premium Bonds and no one is moaning it should be higher.

Your understanding of "decent" does not tally with mine. Particularly not in a falling interest rate and high cost of living environment, few NHS dentists, and terrible GP/NHS service which drives people towards private services.

 

What pays for these services? Tax revenue. Like the politics in the USA currently. No one has the balls to stand up and actually tackle the issues head on. Instead there's constant pandering to retain control of their own backsides.  Kicking the cans can only ever last so long..... 

Many pensioners pay more tax than many working people. But sure, let's go after "rich" pensioners as the majority of them won't vote Labour, anyway.

InvesterJones

friolento said:

daveyjp said:

Just set a maximum limit for cash which can be held in ISAs.  Make it high enough to accommodate anyone who wants lower risk - £250k will fund a decent retirement income.    There's a limit for Premium Bonds and no one is moaning it should be higher.

Your understanding of "decent" does not tally with mine. Particularly not in a falling interest rate and high cost of living environment, few NHS dentists, and terrible GP/NHS service which drives people towards private services.

 

Indeed, £250k would only last 10 years at PLSAs 'moderate' retirement lifestyle, or 6 years at 'comfortable'. If including full state pension then it's still only 15 and 10 years respectively. (flexi-drawdown)

LHW99

I seem to remember that non-tax payers could get a refund of dividend tax deductions. You could go back up to 6 years, if you had the records.

I used to reclaim it for the children who had small amounts in "unit trusts" as they were then

Eco_Miser

LHW99 said:

I seem to remember that non-tax payers could get a refund of dividend tax deductions. You could go back up to 6 years, if you had the records.

I used to reclaim it for the children who had small amounts in "unit trusts" as they were then

They could at one time, then the tax credits only reduced tax actually paid, no cash refunds. Then we got the current system.