Cash ISAs capped at 12,000 (a year)

SnowMan

Ocelot said:

Anyone have a link to where it says this won't happen until 2027?

https://assets.publishing.service.gov.uk/media/6926eb102a37784b16ecf525/E03444720_Budget_2025_Web_Accessible.pdf
4.228 ISA Reform – From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000. Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031. Savers over the age of 65 will continue to be able to save up to £20,000 in a cash ISA each year. In addition, financial services firms will be providing new, easily navigable ways for people to find the right UK investment for them.

4.230 Lifetime ISA Reform – The government will publish a consultation in early 2026 on the implementation of a new, simpler ISA product to support first time buyers to buy a home. Once available, this new product will be offered in place of the Lifetime ISA.

eskbanker

Ocelot said:

Anyone have a link to where it says this won't happen until 2027?

4.228 ISA Reform – From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000. 

https://assets.publishing.service.gov.uk/media/6926eb102a37784b16ecf525/E03444720_Budget_2025_Web_Accessible.pdf

Ocelot

Aah yes, I see it, thanks both.

jak22

eskbanker said:

jak22 said:

From threads many are already confused by ISA rules and individual banks' various T&Cs - this won't fix anything but make things even more complicated - e.g, it's not clear whether its the first tax year after reaching 65 or straight way and how will banks check it - plus loopholes already appearing like going via a S&S ISA

Just as bad are the rises to dividend and savings interest tax rates.

But these measures are clearly designed to increase tax revenues rather than to simplify the taxation regime as such, so it's unsurprising that there's more complexity being introduced?  Clearly there will need to be detail in the legislation when it eventually appears, but presumably the delayed implementation recognises this....

But tax has already been paid on contributions to the ISA, the tax lost on having ISA interest tax-free is a small fraction so this cant be the best way to increase revenue. The best time to think about the detail would be before announcing it - the delay is more likely to give time to banks to update their systems - they likely have asked for more time.

Malchester

At least they have listened to comments about older people using ISAs to provide retirement income. So, being over 65 I will still be able to deposit the full £20,000 in a cash ISA. Being over 65 has some advantages!!!!!!!!

Ocelot

Malchester said:

At least they have listened to comments about older people using ISAs to provide retirement income. So, being over 65 I will still be able to deposit the full £20,000 in a cash ISA. Being over 65 has some advantages!!!!!!!!

One wonders if this limit will apply automatically once one turns 65.

Malchester

Ocelot said:

Malchester said:

At least they have listened to comments about older people using ISAs to provide retirement income. So, being over 65 I will still be able to deposit the full £20,000 in a cash ISA. Being over 65 has some advantages!!!!!!!!

One wonders if this limit will apply automatically once one turns 65.

Well as I am 67 I don't need to worry about that. It will keep an extra £8k out of the increased tax on savings

flaneurs_lobster

Ocelot said:

Malchester said:

At least they have listened to comments about older people using ISAs to provide retirement income. So, being over 65 I will still be able to deposit the full £20,000 in a cash ISA. Being over 65 has some advantages!!!!!!!!

One wonders if this limit will apply automatically once one turns 65.

The admin to verify this would be horrible, we'll see the detail eventually but I'd suspect that any change in limit will be implemented in the tax year following your 65th birthday, to coincide with the new tax year's allowance being available.

eskbanker

jak22 said:

eskbanker said:

jak22 said:

From threads many are already confused by ISA rules and individual banks' various T&Cs - this won't fix anything but make things even more complicated - e.g, it's not clear whether its the first tax year after reaching 65 or straight way and how will banks check it - plus loopholes already appearing like going via a S&S ISA

Just as bad are the rises to dividend and savings interest tax rates.

But these measures are clearly designed to increase tax revenues rather than to simplify the taxation regime as such, so it's unsurprising that there's more complexity being introduced?  Clearly there will need to be detail in the legislation when it eventually appears, but presumably the delayed implementation recognises this....

But tax has already been paid on contributions to the ISA, the tax lost on having ISA interest tax-free is a small fraction so this cant be the best way to increase revenue. The best time to think about the detail would be before announcing it - the delay is more likely to give time to banks to update their systems - they likely have asked for more time.

I'm not arguing that it's the best way to increase tax revenue, just that the objective of the exercise is tax-raising not regime simplification.

And it's hardly unusual for budget announcements not to explicitly cater for every scenario people dream up, so even if the detail isn't in documents yet (whether or not published), that doesn't mean that the announcement shouldn't have been made!

mwarby

wmb194 said:

mwarby said:

I guess you could always invest the remaining £8k in a money market fund like CSH2, although it has the downside of no protection in the unlikely event of CSH2 failing

This assumes cash-like investments aren't disallowed.

Lots of rather safe options compared to full on investing

Government bonds
Bond in general (especially funds which use ultrashort bonds)
Money market funds

I guess the hope is that by needing to find a fund that meets your risk tolerance, many will consider something a little more like investing like index funds, for at least some of their money