What’s Reeves up to with ISA allowances?

[nahthatsnotforme]

I’ve read a couple of news items today suggesting she’s about to reduce the cash isa allowance significantly, allegedly hoping to encourage S&S isas.

This really pisses me off tbh. I won’t be putting money in S&S.

Cash can be put in S&S ISA so it does not change anything. Money market funds can be used within S&S ISA wrapper and some S&S ISA providers pay interest on cash.

Why are you so against putting money in S&S ISAs?

@nannynickCould you explain that please?

I’m too old to ride out the ups and downs

Isn't it just as likely to go down in value thereby ending with less than you invested?

Fair enough.

Another route to reducing tax on your savings is putting them in premium bonds. Not the greatest return, but if being taxed on your interest it’s ok.

Well - it can do. The idea is that it’s a longer term investment - and over a longer period, it will tend to increase.

It’s less suitable for short term investing, as yes prices go up and down.

Yes S&S’s isas wont be affected, but why should everyone gamble their savings due to Labour greed? Irony is, most people invest in US companies not the UK.

£5k barely covers most families for 2 months of mortgage and bills. Yet again, it’s becoming more and more apparent that being financially prudent is punishable. There’s not much left to squeeze at this point.

@MightyDandelionEsq TBF £20k a year tax free saving is a huge allowance - most people have absolutely no chance of hitting that annually.

The £5k is per year, not total held.

This is a total non issue. Have a S&S ISA and just buy a cash fund in it. I do- don’t have a cash ISA just a S&S one but I want some of the money in cash so I just buy a cash fund with a portion of it. You don’t have to invest in stocks.

Hard disagree.

When saving for a house or another life event, a lot of people (and couples) on moderate wages can hit half of that allowance. 4-5k is pitiful.

Doing this ring fences the money but gives you a lower return. You also pay fees. There’s no mention of the allowance of S&S going up; only the cash ISA going down. So either way there’s a loss if you diversify your savings between S&S and cash for easy access.

Most people also get £1,000 a year tax free interest allowance on savings in a bank account.

The ISA is tax free forever - it’s a hell of a good deal. £20k is obviously nicer to have than £5k, and I’m not one to support more taxation, but we can acknowledge it’s a great piece of tax relief.

And re: saving for other goals, it’s not like further saving is banned.

The behaviour they’re trying to change is people having huge amounts of money sitting there unproductive but safe in a tax wrapper - and there is a huge amount of cash being put / held there. Not short term savings - life long.

I won’t be grateful to the government for not taxing me on the money they already taxed me on when I earned it. 1k doesn’t even cover many people’s mortgages for a month in this current climate.

The gov or you may deem money ‘unproductive’ but why must I or other spaff their money about? Maybe it’s being saved for a reason? Maybe it’s so state reliance is reduced during times of hardship.

I wouldn’t be fooled that this is to help us, there’s some very greedy traders licking their chops right now with the hope to get their fees up from people panic investing. Although preliminary reports stated only 1 in 5 current cash ISA users are estimated to go into stocks.

If it drops to 5k nd you need more than that- put 5k in cash and rest in an S&S ISA in a cash fund. Accept its a slightly lower return but the lifetime tax free element is worth using that wrapper

Kemi? That you?

Its not just as likely, it's not a statistical event. It may go up, down or stay the same over a defined period of time but you can't measure the likelihood of any of those outcomes

Personally, it's a pain for me, but let's be clear : They're not taxing you on the money you have, they're taxing you on the interest it earns.

no political agenda and believe people should be encouraged to save but ISAs are very generous wrappers in terms of the annual cap and permanent tax free status. If you really want cash you can save 5k a year in an ISA and about 20k outside that before paying tax on interest (less for high earners). Lots of things are shit in the UK tax system but ISAs are great if you hold them long term.

You make it sound simple if I ignore the word salad.

There is a genuine issue she is trying to solve, which is that British people save far too much in cash products and end up poorer as a result. As a nation we’d be much better off if more people learned about investing and put most of their savings into stocks instead of cash or property. RR has got a lot wrong but she’s not wrong about this.

But if you have more than £25K and don’t want to pay tax what do you do? I’ve used my full Premium Bonds allowance. I think I’m going to move my money from a cash ISA to a fixed one first at least a year and can imagine many others will do the same over the next few months.

@mylovedoesitgooda) it hasn’t happened yet so put as much in your cash ISA as you can b) the proposed changes are to annual contributions so not total balance . If you are saving more than £25k a year that isn’t for short term use I’d suggest you should be looking at longer term investments than cash as inflation will eat away at it.

id rather see less generous cash ISA allowances than more taxes on work!

What Reeves forgets, is that most people in the UK are already heavily invested in equities via their defined contribution pension schemes. This doesn’t apply to her with her public sector, DB scheme that carries no investment risk.

I have a fair bit in cash ISA’s and fully understand the potential upside I’m giving up by not investing in S&S ISAs, but I’m comfortable with that. Taking my pension fund, shares I’ve bought through work SAYE schemes and my cash ISAs into account, my portfolio is about a third in cash. That’s right for me personally.

I work in investment banking and just been made redundant for the second time in my career - it’s not a secure sector at all. I don’t want to find myself in a situation where I have to sell shares quickly in a poor market, (taking a loss), because I need to suddenly access my savings. As people head towards retirement, they also don’t have the time to ride out the highs & lows. Personally, I’d look to diverting my savings to overpaying my mortgage before investing in S&S ISAs.

I won't be fannying around with a stocks and shares ISA at my age. She will probably U turn in 6 months anyway. Don't banks need the money from cash ISAs to keep mortgage rates lower.