MSE News: Martin Lewis suggests alternative to cutting cash ISA limit – a 'starter investment ISA'

saajan_12

5% of £1000 is the grand sum of £50.. its not enough to turn heads on a large scale, but would come at the cost of a lot of admin to administer a new cap and incentive payments. 

If anything, just make the LISA for Stocks & Shares only, not cash - that way its an existing bonus so no incremental cost and the new admin is lite. 

InvesterJones

EthicsGradient said:

InvesterJones said:

bjorn_toby_wilde said:

If you want more investment in the UK then more carrot and less stick might be an idea. What about raising the threshold for CGT for a start off?

Or better, dividend allowance - that might encourage people to invest in dividend paying stocks.. which co-incidentally make up a large proportion of UK listed stocks compared to say the US..

S&S ISAs are already dividend and capital gain tax-free for all amounts, with a contribution of up to £20k each year. 

Exactly - there's no incentive to go for dividend payers so not much goes to UK listed stocks. Nudge people towards dividends and you might find more will go to UK listings.

masonic

InvesterJones said:

EthicsGradient said:

InvesterJones said:

bjorn_toby_wilde said:

If you want more investment in the UK then more carrot and less stick might be an idea. What about raising the threshold for CGT for a start off?

Or better, dividend allowance - that might encourage people to invest in dividend paying stocks.. which co-incidentally make up a large proportion of UK listed stocks compared to say the US..

S&S ISAs are already dividend and capital gain tax-free for all amounts, with a contribution of up to £20k each year. 

Exactly - there's no incentive to go for dividend payers so not much goes to UK listed stocks. Nudge people towards dividends and you might find more will go to UK listings.

What form would that nudge take? Taxation of capital gains within an ISA? That would cause chaos. Also, dividend payers have tended to underperform on a total returns basis, so such a move would potentially compromise investors' interests more than restricting cash ISAs. The companies that are probably best targeted for UK retail investor capital are those with a growth focus, which have the potential to reverse some of the concerns about the make-up and attractiveness of UK equities. These companies, if successful, could also have a wider impact on the economy (though a domestic focus is very limiting for a larger company).

MSE_Helen_K

friolento said:

All put on hold
 https://forums.moneysavingexpert.com/discussion/comment/81536835/#Comment_81536835

Thanks for flagging this friolento. We've just published a news story on these reports with Martin's updated view:

Martin Lewis: 'The government has finally listened' as Cash ISA limit cut reportedly put on hold

GuajarBoy

A further proliferation of ISA products would not help. What is needed is a new product, a UK Equity Bond which would be excluded from IHT. Though not administered by it would be an NS&I product, an individual would be able to put into it £25K per year, dividends could be re-invested without tax liability, and the fund capped at £250,000 each. Though IHT is payable by only a few, many fear their estates willl become liable. A UK Equity Bond would be attractive to older risk averse homeowners wanting to pass wealth to their children/next generation and could release cash investment to UK equities as seems needed by the government.  

ColdIron

GuajarBoy said:

A further proliferation of ISA products would not help. 

I tend to agree

What is needed is a new product

But I'm struggling with this

InvesterJones

masonic said:

InvesterJones said:

EthicsGradient said:

InvesterJones said:

bjorn_toby_wilde said:

If you want more investment in the UK then more carrot and less stick might be an idea. What about raising the threshold for CGT for a start off?

Or better, dividend allowance - that might encourage people to invest in dividend paying stocks.. which co-incidentally make up a large proportion of UK listed stocks compared to say the US..

S&S ISAs are already dividend and capital gain tax-free for all amounts, with a contribution of up to £20k each year. 

Exactly - there's no incentive to go for dividend payers so not much goes to UK listed stocks. Nudge people towards dividends and you might find more will go to UK listings.

What form would that nudge take? Taxation of capital gains within an ISA? That would cause chaos. Also, dividend payers have tended to underperform on a total returns basis, so such a move would potentially compromise investors' interests more than restricting cash ISAs. The companies that are probably best targeted for UK retail investor capital are those with a growth focus, which have the potential to reverse some of the concerns about the make-up and attractiveness of UK equities. These companies, if successful, could also have a wider impact on the economy (though a domestic focus is very limiting for a larger company).

As previously mentioned, just increase the existing dividend allowance for investments held in a GIA from the current £500 to something like £1K annual (or back to the previous 2K) - nothing to do with ISAs. 

masonic

InvesterJones said:

masonic said:

InvesterJones said:

EthicsGradient said:

InvesterJones said:

bjorn_toby_wilde said:

If you want more investment in the UK then more carrot and less stick might be an idea. What about raising the threshold for CGT for a start off?

Or better, dividend allowance - that might encourage people to invest in dividend paying stocks.. which co-incidentally make up a large proportion of UK listed stocks compared to say the US..

S&S ISAs are already dividend and capital gain tax-free for all amounts, with a contribution of up to £20k each year. 

Exactly - there's no incentive to go for dividend payers so not much goes to UK listed stocks. Nudge people towards dividends and you might find more will go to UK listings.

What form would that nudge take? Taxation of capital gains within an ISA? That would cause chaos. Also, dividend payers have tended to underperform on a total returns basis, so such a move would potentially compromise investors' interests more than restricting cash ISAs. The companies that are probably best targeted for UK retail investor capital are those with a growth focus, which have the potential to reverse some of the concerns about the make-up and attractiveness of UK equities. These companies, if successful, could also have a wider impact on the economy (though a domestic focus is very limiting for a larger company).

As previously mentioned, just increase the existing dividend allowance for investments held in a GIA to something like £1K annual - nothing to do with ISAs. 

Ah, I thought this was a suggestion to increase UK equity investment within ISAs.

InvesterJones

masonic said:

InvesterJones said:

masonic said:

InvesterJones said:

EthicsGradient said:

InvesterJones said:

bjorn_toby_wilde said:

If you want more investment in the UK then more carrot and less stick might be an idea. What about raising the threshold for CGT for a start off?

Or better, dividend allowance - that might encourage people to invest in dividend paying stocks.. which co-incidentally make up a large proportion of UK listed stocks compared to say the US..

S&S ISAs are already dividend and capital gain tax-free for all amounts, with a contribution of up to £20k each year. 

Exactly - there's no incentive to go for dividend payers so not much goes to UK listed stocks. Nudge people towards dividends and you might find more will go to UK listings.

What form would that nudge take? Taxation of capital gains within an ISA? That would cause chaos. Also, dividend payers have tended to underperform on a total returns basis, so such a move would potentially compromise investors' interests more than restricting cash ISAs. The companies that are probably best targeted for UK retail investor capital are those with a growth focus, which have the potential to reverse some of the concerns about the make-up and attractiveness of UK equities. These companies, if successful, could also have a wider impact on the economy (though a domestic focus is very limiting for a larger company).

As previously mentioned, just increase the existing dividend allowance for investments held in a GIA to something like £1K annual - nothing to do with ISAs. 

Ah, I thought this was a suggestion to increase UK equity investment within ISAs.

Understood, no, this was my suggestion for an alternative way to increase investment in UK stock listings which some have cited as their reason for playing with cash ISAs - this might achieve that in a simple fashion while also not annoying people who have good reason for large annual contributions to cash ISAs.

Albermarle

GuajarBoy said:

A further proliferation of ISA products would not help. What is needed is a new product, a UK Equity Bond which would be excluded from IHT. Though not administered by it would be an NS&I product, an individual would be able to put into it £25K per year, dividends could be re-invested without tax liability, and the fund capped at £250,000 each. Though IHT is payable by only a few, many fear their estates willl become liable. A UK Equity Bond would be attractive to older risk averse homeowners wanting to pass wealth to their children/next generation and could release cash investment to UK equities as seems needed by the government.  

It is not a bad idea in principle at least.

However I would not involve NS&I .
They are known for 100% safe savings of various forms.

People may invest with them thinking there was no/limited risk and be very cross when their investment dropped 40%. Plus the anti Govt media would have a field day.