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

Cobbler_tone

tigerspill said:

Would this come under age discrimination I wonder?

If it was, that would also apply to a LISA. It is not a protected characteristic in the Equalities Act. The same as you get enhanced redundancy terms over the age of 41. 

af1963

Cobbler_tone said:

I haven't seen or read why they have plucked an arbitrary age of 65 out of the air. The state pension age from 2010? Free bus pass for most of the nation?
I appreciate not everything needs to be tied together but a strange number to pick. 

For many schemes, it's still the "normal retirement age" at which pension payments start, and lump sums may be taken.

Newbie_John

Aretnap said:

Newbie_John said:

Many people already avoid S&S as they may seem very complicated so adding another level of complication will only push people away even more.. they should've taxed Premium Bonds and leave ISA as they were.

There will be no extra complication from the end user's perspective. You are not going to be personally responsible for deciding which investments are ISA eligible and which aren't - that's for HMRC and the ISA providers to argue about. From your point of view the menu of investments that appears when you click "buy" will just be slightly shorter.

Well I guess so, but if I invest let's say regularly into XYZ fund which may stop being eligible I would need to change that.
Also I like keeping my portfolio simple 3 funds, so what will happen, some of them will be locked? Will I have to sell and buy something else?
Keep pre 2027 funds and post 2027? 
Also let's say in worst case scenario they will only allow 100% equity funds.. that would definitely put people off.
If they put threshold on something like 30% min. equities, then people will just use wrappers like Vanguard Life Strategy 30 etc. meaning 70% still ends up in "income" subfunds.

Interesting to see how things develop but just saying that it won't be encouraging , it's more to get more money to HMRC.

FIREDreamer

They are banning S&S ISA to cash ISA transfers too.

However nothing to stop such transfers now in the way of anti-forestalling rules, so time before April 2027 to initiate such a transfer if desired.

Jordan72

So if I receive dividends in my S&S ISAs (currently about 50 payments per year worth maybe £40K) I'm going to have to reinvest them immediately to avoid being penalised? This is utterly ludicrous and unworkable. 

I always thought the idea of trying to 'persuade' savers to invest in S&S ISAs, as opposed to cash ISAs, by reducing the contribution limit to the latter was likely to have little effect. Adding idiotic and confused restrictions to S&S ISAs will only actively discourage potential new investors. Just how much thought was put into these proposals?

MeteredOut

Jordan72 said:

So if I receive dividends in my S&S ISAs (currently about 50 payments per year worth maybe £40K) I'm going to have to reinvest them immediately to avoid being penalised? This is utterly ludicrous and unworkable. 

I always thought the idea of trying to 'persuade' savers to invest in S&S ISAs, as opposed to cash ISAs, by reducing the contribution limit to the latter was likely to have little effect. Adding idiotic and confused restrictions to S&S ISAs will only actively discourage potential new investors. Just how much thought was put into these proposals?

Even if secondary to that, we'd have to be naive to think the measure of changes made to ISAs in the budget was not also to increase tax takings on savings interest.

So, you're not being penalised if you reinvest those dividends, but are if you keep them as cash in the S&S ISA. 

eastcorkram

Cobbler_tone said:

I haven't seen or read why they have plucked an arbitrary age of 65 out of the air. The state pension age from 2010? Free bus pass for most of the nation?
I appreciate not everything needs to be tied together but a strange number to pick. 

Not sure of anywhere in the UK where 65 is the age for a bus pass. 

Qyburn

It would be fairer, accepting that's subjective and may not be a factor anyway, if these restrictions only applied to new money paid into an S&S ISA.  You could have an account that's held some of its investment in STMM funds, and has done so for decades. On the face of it these new rules, that you couldn't have forseen, would mean you can't keep that fund, nor can you transfer out.

MeteredOut

Qyburn said:

It would be fairer, accepting that's subjective and may not be a factor anyway, if these restrictions only applied to new money paid into an S&S ISA.  You could have an account that's held some of its investment in STMM funds, and has done so for decades. On the face of it these new rules, that you couldn't have forseen, would mean you can't keep that fund, nor can you transfer out.

I agree, but much harder for the providers (and individuals, and HMRC) to track/police, without somehow segmenting pre and post 2017 contributions, which would involve significant IT changes (and costs).

Although it could be argued its not a lot more complex than managing flexible ISA contributions across providers when previous tax years are taken into account.

SVaz

What happens if you have a Gilt ladder set up in an ISA?   It could be set up to not start collapsing until 10/15 years time.  

Are they going to start forcing people to sell them, potentially at a loss?