To wonder what the point of trying to save is?

[CircusofPuffins]

Lots of reports today that Rachel Reeves is, as been rumoured for quite a while, due to announce plans to limit the amount that we can save in cash ISAs

https://www.ft.com/content/01371783-0399-412b-82be-c87f3a60ff8c

As someone who has the majority of my life savings in ISAs, I find this really objectionable. Apparently, this has lobbied for by people in the city, wanting more of us to invest in stocks and shares ISAs instead. Despite them ignoring the simple fact that most people won't understand stocks and shares ISAs, or have the necessary time/effort to get clued up on it.

I can't help but feel quite despondent about this, and wonder what really is the point of even bothering to save these days? The last few years I've been trying to be as careful as possible with money, limiting spending on luxuries and putting a decent chunk of my paycheque aside each month to hopefully, one day, be able to buy a house.

But now it seems like labour are targeting savers? And what really is the point of this massive house-building programme they supposedly want to accomplish if the vast majority of us will probably never be able to save enough to buy one in the first place?

What a depressing country this is increasingly becoming to live in...

Some posters are missing the the point of the proposed change. It is not to generate tax but to influence investing over saving.

I absolutely agree with what you say. It is important though to be SURE when investing in savings with a one way gate such as a LISA that you know what you are doing and that that kind of committment suits your needs

There's nowt stopping people with £6k a year to invest from doing that now. You're just begrudging people who can save more. I'm in my 50s and it's taken me years to be in this position. I'd hardly call myself rich.

I am not investing in anything while Labour are in charge. It would be madness

Trussonomics!?

It may not be the direct, explicit intention of the change, but it undoubtedly does have the happy (for the Government!) consequence of generating more tax.

Absolutely. I am by no means mega wealthy. I am not 'hording wealth' or trying to become a millionaire - I'm simply saving to give myself a better future, and hopefully buy a house in the not too distant future. Is that really such a terrible thing?

I sympathise with people worse off, of course, but please let's not fuel this ridiculous notion that anybody who saves is some sort of evil, tax-dodging millionaire. Because while it may feel like that from your position, I can assure you it is far from reality.

I'd like to know how treasury bonds will be treated. If they are counted as stocks and shares there's an easy workaround, as it's not really any different from a cash ISA in my view. Treasury bonds are very safe and you get a decent interest rate on them. Money is locked up for a month which will work for a lot of savers.

I fully support this proposal. It doesn't do enough but is a tiny step in the right direction. The current ISA system is bonkers.

An ISA is like a tax-free personal allowance for savings and investment income. For some utterly bizarre reason, that allowance gets bigger for people who have spent many years accumulating lots of money (by adding more and more into their ISA year after year, maybe £20k per year). Why should this be the case? Just make the total allowable ISA size a certain value, like £50k, for everyone, regardless of when money was invested.

Why should people who have been wealthy (putting money away in an ISA) for a long time get a bigger tax break than those who have only just started being able to save?

Your money will not disappear if in a world tracker as it tracks the major stock markets of the world. If it were to crash the world is fucked anyway and cash would be useless.

Well - you can just invest that income in S&S instead of keeping it in cash, and continue to avoid paying any tax on the growth that way.

The worst possible thing you could do. What you have already saved won't be affected. Premium Bonds are rubbish.

Because those people have likely been paying a higher tax rate on their salaries, and for a longer time.

Why should people who have been wealthy (putting money away in an ISA) for a long time get a bigger tax break than those who have only just started being able to save?

Look it another way, why should people of moderate means who have prudently saved for their retirement rather than pissing their money up the wall when they were younger be penalised?

In the nicest possible way, fuck off! It is utterly ridiculous to claim that anyone able to save and trying to get together a house deposit (ie not even yet a homeowner!) is “rich”.

It speaks to your own grasping jealousy that such a thought would even enter your head, never mind make it into a post in a thread which isn’t even about “tax the rich!”, it’s about the government’s misguided attempts to get more money into the uk stock market because they’ve been told it’ll help with growth.

Other than growing fund managers’ income, it won’t do that because sensible money will go into a global tracker rather than anything uk-specific.

The loss of new cash ISA funding from banks (and more significantly building societies’) balance sheets will also have unfortunate but very predictable consequences for the cost of borrowing in future.

Keep cheering it on though - this stuff depends on there being a sizeable population of useful idiots.

In what way are those people being penalised? They still have their savings, they just don't get a massive tax break on the income generated by those savings. The people who pissed money up the wall have no savings and therefore no income being generated by savings either.

There is no tax on savings, only a tax on income generated from savings (which can be avoided with an ISA).

So do you think that people who have earned lots of money in the past should have to pay less tax in the future?

Interesting take, not sure I agree.

@Telemicusi don't know whether you're deliberately missing the point here or trying to start an argument. Either way I'm out.

Do you think people are going to put the cash under their mattress if they reach the ISA limit?

The difference will be in savings accounts or S&S accounts (which are bigger earners for the banks), so why would it impact borrowing costs?

It's a managed fund via a financial advisor, not sure of the exact fund name. My kids have child ones via the same advisor (but different fund scheme) and theirs have done brilliantly! Mine does usually go up a little but last 3 months made small loss.

Sorry if I have misunderstood, I'm really not tying to start an argument. My interpretation of what you wrote is that you think people who have paid more tax in the past should get bigger tax breaks in the future. I have read and re-read and can't see what I have missed.

Well in that case there’s nothing stopping you putting your money into the bank. People expect a better rate of return from an ISA, but to take zero risk AND not pay tax on the interest. If you want to make more money, you need to take more risks. If you want your money to be perfectly safe (which is absolutely understandable, especially for us older savers) you can’t expect a big return.

@Telemicus absolutely not asking for a bigger tax break. Just explaining why existing tax breaks on ISAs should continue, especially if I've been a higher rate tax payer for 10+ years. My point is that myself and people like me pay plenty of tax already.

The ISA wrapper is a tax free wrapper. That’s its whole purpose.

What tosh. Many people could spend less and many people could earn more. That doesn't apply to everyone. But if someone chooses to scrimp and save, they should be allowed to keep what they have saved. Otherwise, as OP has suggested, what is the point. Hi work enough hours to get by, then stop. Let's see what that does to the economy and public services. It's ok to want to keep your own money. That's not selfish.