Don't cut Cash ISA limit, MPs urge Government

MSE_Abby

Reducing the cash ISA allowance won't motivate people to invest in stocks and shares, a cross-party group of MPs has warned. In a new report published on Saturday 25 October, the Treasury Committee has urged the Government to leave the £20,000 limit in place – echoing previous calls from MoneySavingExpert.com founder Martin Lewis...

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'Don't cut Cash ISA limit, MPs urge Government – as Martin Lewis says 'carrot will work better than a stick' to encourage investing'

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The_Green_Hornet

https://forums.moneysavingexpert.com/discussion/6607276/reeves-isa-review

Kim_13

I’d like to know why anyone would think the government should start reform by looking at the Personal Savings Allowance rather than Cash ISAs - use of the former is more likely to result in savers achieving above inflation returns on an emergency fund that should be held in cash.

jimjames

Kim_13 said:

I’d like to know why anyone would think the government should start reform by looking at the Personal Savings Allowance rather than Cash ISAs - use of the former is more likely to result in savers achieving above inflation returns on an emergency fund that should be held in cash.

It does seem somewhat odd that you essentially get 2 bites of the cherry with tax free ISAs and then a tax free allowance too. I could see the logic in removing it so that interest is taxable as it used to be and ISAs are the vehicle for getting interest without tax paid as they were originally.

wmb194

jimjames said:

Kim_13 said:

I’d like to know why anyone would think the government should start reform by looking at the Personal Savings Allowance rather than Cash ISAs - use of the former is more likely to result in savers achieving above inflation returns on an emergency fund that should be held in cash.

It does seem somewhat odd that you essentially get 2 bites of the cherry with tax free ISAs and then a tax free allowance too. I could see the logic in removing it so that interest is taxable as it used to be and ISAs are the vehicle for getting interest without tax paid as they were originally.

IIRC the idea behind the PSA was to minimise the number of people needing to complete self assessment or otherwise need HMRC to adjust tax codes etc.

masonic

A return to the deduction at source regime would be helpful if going down that road.