ISA reform update

booneruk

https://forums.moneysavingexpert.com/discussion/comment/82071500#Comment_82071500

'Forced' - Really? I thought you could just put whatever cash you have into fractional shares of CHS2?

Mymoneynothmrcs

“Yes, investment decisions should be made at portfolio level and not each account or wrapper in isolation. However, the vast majority of people operate a stocks and shares ISA nowadays. They don't tend to spread it around, as there is little point in doing so with modern whole-of-market platforms.”

I could not agree less re the last point. Different platform have very different features and charges. 212 and ii for example re mmfs and bonds offerings. 212, ii and HL on platform fees.

”Yes. That is a possibility, but it is difficult to claim it penalises administrative arrangements when having multiple ISAs already increases administration.”

As above having isas for different purposes is a necessary as the offering and charges vary. This isn’t any more complex than having a current account and a saving account.

little point in mse if all financial products are the same as suggested.

As I said in an early post what is needed is education.

masonic

https://forums.moneysavingexpert.com/discussion/comment/82071555#Comment_82071555

I agree with you on the education point, but the fact is platforms will adapt to any changes. All T212 needs to do is use QMMF exclusively and they will fall outside the scope. Several other platforms pay a pittance in interest, or none, and these can adapt by not paying anything going forward. There will continue to be choice and innovative products in the market, and the changes will have negligible impact on a typical S&S ISA portfolio on the whole.

It may be of interest to note there have been recent launches of alternative ETFs to CSH2 with a much lower share price, allowing better handling of residual cash in platforms such as HL, which do not allow fractional share ownership and also pay a low interest rate on cash. With ii, SWSD, and Freetrade, you can already choose a STMMF as an OIEC without taking the hit of extra charges.

Frustrating that existing investors will have to work around the changes, but those workarounds are not that onerous.

friolento

“This proposal is a tax grab, however it is presented“

Except it is highly unlikely to yield any significant amount of cash for the Treasury.

These changes appear to have been designed by someone who holds a deep grudge against people who prefer to keep cash rather than investments. Or by somebody who doesn’t understand investments, or both.

Albermarle

For some context it is probably worth pointing out that even with the reduction from £20K to £12K pa for cash ISAs, the UK tax treatment of savings interest is still very generous by international standards.