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

Eco_Miser

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. 

Higher rate taxpayers may prefer the certainty of interest in a cash ISA to the chance offered by PBs.

For me (base rate), I already have most of my investable cash in a S&S ISA, and I don't want to put more in, and I don't want to pay tax on the interest on the uninvested cash, so I want it in a cash ISA.

jimjames

Sg28 said:

In 1999 the cash isa limit was £3000. Adjusted for (the boe's) inflation this gives around £5,750. 

And the total ISA limit was £7k. The current limit does seem very high when the average person has a fraction of that annual amount in savings so allowing £20k year on year is benefitting those who can afford it and reducing revenues.

daveyjp

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.

 

I am talking £250k of cash ISA holdings limit   Anyone with that in ISAs should have plenty of other retirement income from personal and state pension.

jimjames

Stubod said:

..they should just stop all ISA's and raise the basic tax threshold, and increase the current £1k savings allowance before tax to (say), £2k..??

That's fine for cash ISAs but the benefits of S&S ISAs go way beyond a £1k interest allowance (£500 or less for higher rate)

pecunianonolet

Another great argument for moving my tax residency away in the next couple of months and invest where I get something in return, working services and where creating wealth and working hard for it making sacrifies to build something is appreciated and not patronised and penalised. 

mebu60

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. 

Perhaps so when you have a decent income and potentially a lot of life in front of you but when your pot no longer gets replenished after large capital expenditure and the final curtain draws ever nearer your risk profile changes. I still have a tidy sum in S&S ISAs but have maxed out in Cash ISAs in recent years, particularly the latter ones when interest rates had a little peak. 

Kim_13

jimjames said:

Sg28 said:

In 1999 the cash isa limit was £3000. Adjusted for (the boe's) inflation this gives around £5,750. 

And the total ISA limit was £7k. The current limit does seem very high when the average person has a fraction of that annual amount in savings so allowing £20k year on year is benefitting those who can afford it and reducing revenues.

I’d agree with that, however leaving the £20K unchanged on the proviso that most of it is S&S does the same. Those in the middle are forced to pay more tax or take a risk that would be better suited to those that would actually be affected if the £20K figure was lowered.

Swipe

IvanOpinion said:

I know it's not the same and there is increased risk, but people could invest in a money market fund in a S&S ISA.

All well and good until they put a stop to that. I certainly wouldn't put it past them. If that happens, I wonder what would happen to the MMF I currently have in my S&S ISA.

subjecttocontract

I feel quite fortunate that we have been saving money in isas for years and built up around £0.5 million free of tax. As a result I'm really not to bothered what gets announced on July 15th. We'll just accept the outcome, roll with the punches and do what suits us best.......which won't paying into S&S isas.

Area88

IvanOpinion said:

I know it's not the same and there is increased risk, but people could invest in a money market fund in a S&S ISA.

There is no FCFS protection and therefore people could lose all their money. Gold is safer.