Cash ISAs capped at 12,000 (a year)

wmb194

Pat38493 said:

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.

I’m not sure this would be possible unless they create a hard stopping point for existing deposited ISA amounts.  I don’t think they would retrospectively change how existing S&S ISA savings can be invested (theoretically they could I guess but typically governments don’t do things like that).  Therefore they would have to say from 2027 you can only sets up a new ISA with the additional restrictions.  Also - from what I understand they want to encourage people to invest in UK investments, so even limiting cash interest on uninvested balances or MMF would not be enough - they would have to say that newly opened ISA can only be invested in UK shares and funds with at least x% of UK based companies or suchlike.

It should be easy to manage: you allow existing cash-like investments to be kept and sold but don't allow new purchases. I've occasionally experienced this with brokers for various securities.

Middle_of_the_Road

london21 said:

I started with cash ISA and moved to index funds. Think some people just do not like risk.

That would be a good assumption 😉 

allegro120

Rheumatoid said:

DRS1 said:

Eldi_Dos said:

Wish I had listened better when I was younger.

Many thanks.

But back in 1900 there wasn't an ISA to invest through.

? TESSA or something like that

Yes, there was TESSA before ISA.  5 year account. £3k in the first year and £1.8k in each of the next 4 years. Maximum balance was £9k, so If the maximum was deposited in the first 4 years, only £600 could be added in the fifth year. 

retroman62

borders said:

I await the details on when the over 65 limit kicks in. The tax year you turn 65, the tax year after you turn 65 or actually on your birthday? I will be 65 in 2027, so the timing is relevant for me. And even more so for my wife who's birthday is the 6th April. 

Yep, I'm in that boat too.

Confused_Dog

Almost certain that there will be a repositioning of the cash ISA market come April 2027 with Reeves or whoever holds the Treasury Red Boxes by then hoping that interest rates are lower, especially if they are going to have to use NS&I products as a way of bringing money in.

Getting as much of their cash savings from customers into ISA wrappers may also benefit providers too.  More cash in your institution,  Less reporting of savings accounts to HMRC - less admin

Section62

Confused_Dog said:

Almost certain that there will be a repositioning of the cash ISA market come April 2027 with Reeves or whoever holds the Treasury Red Boxes by then hoping that interest rates are lower, especially if they are going to have to use NS&I products as a way of bringing money in.

Getting as much of their cash savings from customers into ISA wrappers may also benefit providers too.  More cash in your institution,  Less reporting of savings accounts to HMRC - less admin

Don't they have to report on ISA holdings anyway?  I thought ISAs involved more admin, one of the excuses reasons given by banks in the past for ISA rates being lower than equivalent non-ISA savings rates.

Kim_13

Section62 said:

Confused_Dog said:

Almost certain that there will be a repositioning of the cash ISA market come April 2027 with Reeves or whoever holds the Treasury Red Boxes by then hoping that interest rates are lower, especially if they are going to have to use NS&I products as a way of bringing money in.

Getting as much of their cash savings from customers into ISA wrappers may also benefit providers too.  More cash in your institution,  Less reporting of savings accounts to HMRC - less admin

Don't they have to report on ISA holdings anyway?  I thought ISAs involved more admin, one of the excuses reasons given by banks in the past for ISA rates being lower than equivalent non-ISA savings rates.

If savers have multiple taxable savings accounts with them, then I’d imagine it’s more hassle than an ISA report (where the provider is able to restrict a customer to having only one ISA with them per tax year if they wish.) 

mebu60

Confused_Dog said:

Getting as much of their cash savings from customers into ISA wrappers may also benefit providers too.  More cash in your institution,  Less reporting of savings accounts to HMRC - less admin

Still have to report to HMRC so that contributions can be consolidated by NINo. Plus commitment to managing transfers-in and flexibility if offered. 

Tommaso46

I have 2 Cash ISAs and both of them emailed me today to notify that they are going to cut the interest rate in early December. I assume this is because the new rules reduce future Cash ISA demand and point to further base-rate cuts in future. So the providers no longer need to offer high rates as a way to attract deposits. I am VERY UNHAPPY about this because I'm old and I rely on the interest from ISAs to supplement my pension. This is not looking good. AND the tax rate on savings is going up by 2%. Thanks for nothing Rachel Reeves.

eskbanker

Tommaso46 said:

I have 2 Cash ISAs and both of them emailed me today to notify that they are going to cut the interest rate in early December. I assume this is because the new rules reduce future Cash ISA demand and point to further base-rate cuts in future. So the providers no longer need to offer high rates as a way to attract deposits. I am VERY UNHAPPY about this because I'm old and I rely on the interest from ISAs to supplement my pension. This is not looking good. AND the tax rate on savings is going up by 2%. Thanks for nothing Rachel Reeves.

Despite the timing, it doesn't seem likely IMHO that any interest rate cuts being applied by ISA providers will have anything directly to do with the changes announced yesterday, given that they don't come into force until 2027, and it seems more plausible to me that they'd have been planned before the budget but (sensibly) deferred just in case anything relevant was being introduced immediately.