Robbing Rachel’s ISA Reforms

[TheSassyTraybake]

Although not mentioned in her speech the document released by the treasury hints at reforms to ISAs to “get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission”.

Nothing concrete as yet but looks like they are planning to move against cash ISA’s, either reducing the annual limits or the amount that can be held in them.

Personally I think a cash ISA is a waste of time, but that’s because I use my annual allowance for stocks and shares.

Interested in other people’s thoughts?

@HappyHolidai , so funny “marks you out as being a Tory”. The horror, someone who sees things differently to you! Whatever next. 😱

Labour are purposely ending a lot of things that people "need". What makes you any different? You've supported a lot of their policies, is it just because this finally impacts you?

@Ilikewinter , if you’re not confident with stocks and shares you might find investing with Vanguard more comfortable.

Eh? I’m just saying why I don’t invest in stocks and shares. I haven’t said whether I agree or disagree with any policies and I haven’t even said I disagree with the rumoured isa changes. If they happen I’ll just pay the tax 🤷‍♀️

Yeah I think it's time I started getting clued up on investments 😀

@cardibach if someone actively invests they usually wouldn't have one sole source of income to rely on. All money stuff says have several sources of income.
To avoid situations like right now where people may have to rely on a depleted pot.

You Keep your capital and the usual rule is to draw a4% a year off the top.
Usually again you would move your portfolio from equities to a balance of bonds and equities as you near retirement so it's more stable.

My DD is just 18 and has a Saturday job since 17.

She's saving into two pots long term one cash and one stock and share iss. Only 25 a month into stocks.

I know very well what I'm doing and I've been invested for over a decade my biggest regret is not starting sooner .

Even with the volitilty right now I'm well up on normal savings rates.

@Ilikewinter
Read some of the classic investments books,eg the psychology of money, the simple path to wealth, millionaire next door and so on.
Meaningful money is a good podcast and the FB page.
The basic rule is buy large baskets of companies to spread the risk. If a company fails it simply drops out the index and gets replaced.
You will have hundreds of companies in your basket so it won't directly impact you

I don’t need you to explain it thanks. I’m well aware. I’m simply saying some people don’t have money to put aside and a)risk even short term losses or b) have to leave untouched until they recover.

There’s a bigger picture here. In the UK we don’t really have a culture of ordinary people investing in the stock market. On average UK households have about 8% of their wealth in stocks. In the US that number is 33%. This is one of the reasons American households are much richer on average than British households. It also helps fund the US economy and help their economic growth.

RR knows this is a problem. While individuals might have good reasons not to own shares, in aggregate the problem in the UK is clearly a cultural one. We would, in aggregate, be much richer if we could shift that culture and encourage people to take more risk. But as this thread has shown, any attempt to do that is met with vocal protest.

I have some shares from ages back and now have the bother of reporting the dividends for tax

Only if over £500 per year.

If they're such a problem, just sell them.

£536 so probably less than £5 tax. Apparently you have to ring or write to HMRC if paye. I will sell some. Shares are worth about £15k from old sharesave scheme

Shift some to an ISA and you'll avoid the tax.
(I say some as you will pay CGT and stamp duty. I would move some each year, when prices are dipping).

I did wonder if I could shift some in an ISA now, I didn't bother when I got them as CGT allowance was high and tax allowance for dividends was high and at one time only for higher rate tax payers, there must be loads of people like me that now have to pay tax, I looked on my personal tax account but it didn't mention reporting dividends just seems to be by phone or post. It's a paper certificate. I think I need to read up on this to see what to do for the best. I will have to pay the tax this year, I have to tell HMRC by October and they adjust my tax code.

They need scrapping because they don't even keep pace with inflation. At least with share ISA they grow with what ever investments are made but the risk is that they can be impacted by things like Trump

Personally I think we are heading for a recession and it doesn't matter what government is in....it's a done deal. America is having it's Brexit moment but the impact will.be felt globally because of the size of the economy. In the short term America faces a lot of pain and so do we but long term it could pay off because it will likely force Americans to make things rather than import....but it's a huge gamble because the are betting on the world opening up while accepting tarriffs....I'm not sure America is that powerful that it has that much influence on India, China and Europe

Whether a cash isa keeps up with inflation is dependent on the interest rate which has been better over the last few years.

You could say the same about many savings accounts if interest rates fall much more.

Cash isas are an easy way to save money knowing it won't be taxed or that it would be affected by a potentially volatile market and that's why they are popular.

IMO the treasury see this and they want the tax revenue nothing more, nothing less. Reducing cash Isas is just another way to screw over the electorate

Cash v equity ISAs is for many the same as risk v no risk. Not everyone wants to risk potentially losing some of their capital, even if the potential long term rewards are better. People shouldn’t be forced into that just to help the government, by all means encourage the use , but leave the cash Isa option as it is for those who prefer that

Or another way to raise the tax desperately needed! Why not tax unearned income ? Why do we always tax the workers till the pips squeak. The tax burden needs to be spread more broadly.

The majority of people who invest in an isa are workers and already paying tax on income. The money they are putting in the isa will have already been taxed.

The whole point of the isa when it was brought in by gordon brown was that it would be a way to invest 20k tax free, to encourage people to save for their future.

The majority of people who invest in an isa are workers and already paying tax on income. The money they are putting in the isa will have already been taxed.

They haven't been taxed on the growth in the cash ISA though - that's what tax on interest is all about.

I do entirely agree though that reducing the limit would simply be a disincentive to save for yourself which is not smart IMO. Encouraging pension and cash savings and self sufficiency in later life enables the govt to keep the state pension at a minimum which is wise.

That's not how taxation works. Every worker has paid tax on their wages, then taxed again when they spend, i.e. VAT, fuel & alcohol duties, etc. Income earned from your savings isn't exempt from tax just because you may have paid tax on it when you earned it.

It’s bad that the tax free allowance hasn’t been raised. I think it should be

I expect the annual limit to be reduced, perhaps from next tax year. Not great but better than some of the alternatives.

I have cash ISAs as they are for a particular purpose and appreciate the certainty in financial planning.

@HappyHolidai can you hear yourself? 😂

Surely everyone’s got ‘political bias’? You are being bias right now by discrediting opinions coming from a potential Tory voter? Embarrassing