DOOM: ISAs

[AtW]

“Slash tax breaks on savings for the wealthy, ministers told

New proposals to cap Isas would raise £1bn per year for the public purse, report finds

Isa savings should be capped at £100,000 to stop wealthy families from benefiting too much from “costly and unnecessary” tax breaks, a leading think tank and charity have said.

All savers would face a total limit of £100,000 of tax-free cash under proposals set out by the Resolution Foundation and the Abrdn Financial Fairness trust.

Individual savings accounts (Isas), allow savers to put away up to £20,000 every year without having to pay tax on any interest or gains.

The joint report found that the three main government saving schemes – Isas, Lifetime Isas and Help to Save – together disproportionately benefited wealthier families, thanks to their much higher levels of cash savings.

The richest tenth of households are on track to gain £800 on average from the schemes next year. Meanwhile, the poorest tenth of households are forecast to receive £38. The average was approximately £250.”

https://www.telegraph.co.uk/personal...inisters-told/

First feck up pension limits, next nerf ISAs

[Protagoras]

This looks like another of these reports that fails to recognise behavioural aspects of policy.

If the cap was to be reduced to £100k, these 'wealthy' people would simply find another store of wealth - there would be little incentive to leave the funds in place and pay additional tax. Presumably this is mostly investment ISA funds rather than cash.

Policy objective: more opportunities for 'lazy old men', not incentivised to work much, save much.

[vetran]

The richest tenth of households are on track to gain £800 on average from the schemes next year. Meanwhile, the poorest tenth of households are forecast to receive £38. The average was approximately £250.”

of course the poorest are on benefits which may well exceed £800

sooner or later those earning money will stop paying tax.

[xoggoth]

£100k hardly qualifies as wealthy.

[vetran]

£100k hardly qualifies as wealthy.

£100k in savings is quite a lot for most people sadly.

https://www.money.co.uk/savings-acco...st%2C%20months.

Overview: UK savings statistics 2022

• The average person in the UK has £17,365 in their savings.
• 34% of adults had either no savings, or less than £1000, in a savings account.
• 61% of UK adults save money either every, or most, months.
• Almost two-thirds (65%) of people believe they wouldn’t be able to last three months without borrowing money.

I imagine most of us on here probably have > £100k in savings but we are unusually well paid. 90th+ (>£60k - yep its not a lot really compared to the figures we hear but its the facts) percentile for most

https://www.ons.gov.uk/employmentand...%20per%20month

In the three months to August 2022, the 10th percentile of the monthly pay distribution was £695, the 90th percentile was £5,022 and the 99th percentile was £14,346 (Figure 5). This means that:

• 10% of payrolled employees earned equal to or less than £695 per month
• 90% of payrolled employees earned equal to or less than £5,022 per month
• 99% of payrolled employees earned equal to or less than £14,346 per month

Yep if you are paid > £5k a month then you are doing better than £90% of waged employees suck it up!

[DoctorStrangelove]

Strewth.

Apparently I'm "rich".

Who'd have thunk?

[vetran]

Strewth.

Apparently I'm "rich".

Who'd have thunk?

not rich well off, rich I tend to reserve for those that don't need to work.

[AtW]

£100k hardly qualifies as wealthy.

If it is then so should pension pots of equivalent size

[Protagoras]

If it is then so should pension pots of equivalent size

They've got a little list ...

[d000hg]

This looks like another of these reports that fails to recognise behavioural aspects of policy.

If the cap was to be reduced to £100k, these 'wealthy' people would simply find another store of wealth - there would be little incentive to leave the funds in place and pay additional tax. Presumably this is mostly investment ISA funds rather than cash.

Which other tax-free savings are there? I would imagine people with S&S ISAs would simply keep their investments outside the ISA instead which makes the growth taxable (under CGT IIRC?)

£100k hardly qualifies as wealthy.

This is true. A limit is not unreasonable to tax-free savings, though I don't support it, but this is not very much.
Although it may be somewhat moot since it's a tax on profits not savings, people with lots of savings are not going to be stiffed too badly. It's just another bit of fat to trim.
We should remember this whole thing has only really been around in common usage for about 30 years anyway, I remember my dad being excited when it was introduced and I'm assuming several of you are old enough you might even have had TESSAs, though probably few are old enough to have had PEPs?