HMRC will stop cash-like investments in S&S ISAs

Sea_Shell

boingy said:

Surely they have to allow a couple of weeks of grace for cash. Simply selling a fund and buying another within an S&S ISA can take a few days. It would be harsh to tax that money, even though it would be a fairly small amount.

That money wouldn't in itself be taxed, would it?   Just any resultant interest it earns.

babellon

Are there senior ISA's in existence and if so which would people recommend?

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81869972#Comment_81869972

No, I was just speculating that they might be created as a way of implementing the differentiation between rules for over- and under-65s, but it's still very early days (nothing changes until April 2027) and details haven't been announced.

Taffy22

https://forums.moneysavingexpert.com/discussion/comment/81835577#Comment_81835577

I have most of my investments in S&S ISA`s, mainly in dividend paying shares and ETF`s. Being over 65, I allow the dividends to accumulate as uninvested cash until sufficient to justify transferring the cash to a cash ISA reducing risk.
As I understand it, the proposed changes to S&S uninvested cash compromising of dividends will be taxed and cannot be transferred out.
I suspect my only option before April 2027 is to sell most of my shares, transfer the resulting cash to cash ISAs  and after April 2027, sell shares and withdraw the proceeds out of the ISA as I need the money.
This seems to be counterproductive to the intended rules of promoting more investment in S&S ISA`s. Or, am I missing something?

dunstonh

Or, am I missing something?

As the final rules have yet to be published and there are lots of issues that need to be resolved, it is probably best just to keep an eye on what happens as there will be time to adjust once they are known.

In particular, what happens to 65+ investors and the options they have available to them.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81873000#Comment_81873000

As above, nothing has been decided yet, but it's clear from the government's tax newsletter (linked at the start of the thread) that the proposed changes apply to under-65s, with the clear implication being that they don't apply to over-65s! Obviously anything can happen during design of the detail, but I haven't seen anything credible that would suggest over-65s being impaired in their ISA choices in the way you're suggesting.

boingy

https://forums.moneysavingexpert.com/discussion/comment/81853261#Comment_81853261

Yeah, an opt out would be sensible. Now, do we think the rules will be sensible?

jimjames

https://forums.moneysavingexpert.com/discussion/comment/81853176#Comment_81853176

Some providers (like iWeb/SWSD) have never paid interest on cash balances. When rates were 0.5% it was understandable but it's probably one way they fund the otherwise free (for holding) platform cost. Gives an incentive to keep cash invested.