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.

I use the ISAs though and it is for retirement.

I wouldn’t class myself as wealthy.

its usually possible after paying off mortgages that it becomes a possibility

It may not be a fortune but it is significantly more than you are likely to have got from a defined contribution pension in the same circumstances.

That’s what a lot of nhs / public sector workers don’t seem to realise.

i don’t begrudge the pension at all, but it is irritating why people don’t realise how good it is compared to the alternative that most people have access to

What’s really irritating is the general idea that we retire after years of being very poorly paid with a pension that makes up for it.

The absolute maximum an nhs pension can be is half your final salary. To achieve that you have to have 40 years service at full time.

Given nurses are paid appallingly and the vast majority don’t work full time for all their career that’s very few. I can only think of one.

Do the maths

We are also contributing more than most people in the private sector! I pay 15% of my salary into my pension, DH pays 2%. Of course my pension pot is bigger.

People I know, and myself, with cash ISAs are 'average' workers trying to save for retirement (and like other PPs too). Although trying to plan ahead and provide for oneself is looking less like the sensible approach these days. Why bother.

Not everyone has the £1k savings allowance either. Higher rate tax payers (again many 'Mrs&Mr Average' now scrape over the hrt threshold) pay 40% tax on any savings interest over £500.

Why bother? because its very nice to have some savings and regardless of any tax free changes, even if they were removed completely, you'd still be paying just 18% gains made on a S&S ISA or 24% if a higher rate payer.

Before, i think the 90s, these products didn't even exist, certainly not at a 20k limit pa.. was 3 or 6k i think?
People did save pre ISA!

Remember also, as rates fall, the amount you'll get will plumet too, so its a good idea to have some savings in a S&S ISA, there are no plans to change these.

Hopefully she won't do it. It'll just p*ss more people off, after all they've always done that to so many others already.

This isn't true.

You might retire on the 1995 pension with half your salary but if you had worked your entire career in nursing and were an 8a, you'd retire on 30k with an additional 120k tax free lump sum (and you would be entitled to take it at 55).

If you are on the 2015 scheme and are an FT 8a, then you are accruing £1,150 a year pension for each year you now work, PLUS that is increased each year by the cost of living.

You'd need about 20k to buy that as an annuity.

It's probably the best pension in the country.

No S&S ISA for me, if she does this it will be a complete disincentive.

I think you need to read my last paragraph.

Why? S&S ISA's over time can make excellent returns, all tax free.

eg i took one out as a PEP 30 + years ago, it was a FTSE Tracker, 3k, no more, its now worth 18k... in a savings account, i'd be lucky to have 5 or 6k.

Last year put 20k in a medium risk S&S ISA, its now 22k, a 10% return in 14 months, High street bank.
I'm taking the 2k and going to France for a late summer trip.

Posters like the one you’re replying to think that your money is theirs, even if it’s already been taxed as you earned it, and if you’re allowed to keep it, that’s a subsidy.

She might do it, but then there’ll be a u-turn and possibly some tears I expect!

I think you are struggling with earned vs unearned income.

Not at all, but thanks for your concern. Again, the absence of a tax is not a subsidy. Try to contain your jealousy.

Why does everything have to be earned income anyway. Sick of this government and RR

Anyone stupid enough to have substantial holdings in Cash ISA's deserves to pay tax on the interest.

Really .....why? I'm going to retire in a couple of years and the last thing I want is too much of my savings open to the vagaries of the Stock Market. Perhaps I'm wrong?

I was reading that it's possible to put money into S and S but into pure cash. No stock market interference. Apparently some pay 4.35%. No fees

I haven't researched this yet

🤣🤣🤣

Shes going against Saint Martin (Lewis) on this one!

Just pay your tax.

Jesus what is wrong with this country? You want free health care but won't pay tax

Are you going to spend all your cash the moment you retire? or draw it down over time, say 10 or 15 years?

Even massive global shocks like Covid, only caused the SM to fall over the short term, it soon came back, same with the GFC or Trump & Tariffs.

I've S&S & Cash ISA's, the S&S out perform the cash ones time and time again.

But i do find it amazing that people expect the tax payer to fund their tax free status, ISA's cost the govt £5billion per year in lost tax... & no, me making a voluntary contribution to HMRC will not make a dent in that £5 billion.

I hope Reeves puts a limit on cash isa holdings, say 100k and mandates S&S ones should have a min, say 10% invested in the UK or tax payable.

I would but say it's not just as likely to go down. It's more likely to go up but there is some risk.

It trends up on average. So if you have a "portfolio" ie a large, balanced, diversified collection of S&S then it has a pretty high chance of going up.

scenarios where it could go down might be if you invest just before a recession and then need it in 3 years.

a much bigger but less likely risk is if society collapses or we have a major war where we are attacked on home soil, and it causes recession bigger than we have ever seen before. That could sink the stock market. But we assume that's unlikely. Although if it did ever happen, cash would be worth very little too.

But i do find it amazing that people expect the tax payer to fund their tax free status, ISA's cost the govt £5billion per year in lost tax

I find it amazing that interest is taxed to be honest. The money which earns the interest has been taxed once already. But there we are.

So anyone stupid enough to be saving a house deposit for example? What a nasty and poorly thought through post.