Reeves doesn’t deny plan to slash cash ISA limit

Barleyfields

I’m looking at reducing the value of my estate GG, with an eye to minimising IHT. Things I can enjoy now but which won’t hold their value.

Only if they are listed in your will, and insured…

Not content with wanting to merge pension funds (aka unlocking other people’s money contained in them) so that they can be used for larger (riskier?) investments, Reeves now wants to force people to invest in the stock market if they want tax-free interest. I find this degree of meddling in personal finances quite intolerable.

How can you call Rachel Reeves a dictator? Putin is a dictator, Assad was a dictator, Trump is not far off. Ridiculous accusation.

Thank goodness, I haven’t got enough money to have an ISA so it doesn’t really affect me….🤓
I do have quite a high interest savings account, but I only manage to save about £1000 a year in that but it’s my little nest egg…
I’m quite content with this….🤗

mrsmeldrew

How can you call Rachel Reeves a dictator? Putin is a dictator, Assad was a dictator, Trump is not far off. Ridiculous accusation.

No, she's not a dictator.

But she is manipulative.

Shinamae

Thank goodness, I haven’t got enough money to have an ISA so it doesn’t really affect me….🤓
I do have quite a high interest savings account, but I only manage to save about £1000 a year in that but it’s my little nest egg…
I’m quite content with this….🤗

Shinamae 🤗

Good for you Shinamae. 😊

Barleyfields

Exactly, Norah. Add up the unnecessary expenditure and some would be horrified.

How are you defining ‘unnecessary’, and who are ‘some’?

I’m not being picky, but on GN ‘Some People’ has long been a passive aggressive way to dig at others on a thread , so it’s always a good idea to clarify who is meant by the phrase in the context in which it is being used.

There is something of an obsession about coffee and nails on here - probably as there was no means of spending money on those things ‘in our day’. Mobile phones are another bete noir for similar reasons. They didn’t exist so we ‘managed without’ them, but unless we were hermits or closeted nuns we probably bought ‘unnecessary’ items in our youth too. So what? Everyone is ‘allowed’ to spend or save as they wish.

The question is, how should governments regulate the system so that all citizens are treated fairly? Taxing the low paid and those on pensions with no other income night be equitable, but is it fair to do it at the same time as creating loopholes for those who can afford to save significant sums? If £20k per person seems like an insignificant sum to posters, I suggest that they wander a bit further from their garden gates and see how most people live.

Re tax - I don’t usually mention my own personal circumstances as they are not relevant to my political beliefs (or if they are that is by the way, really), but if ISAs are cut I would lose out by it. I am not driven by the so-called ‘politics of envy’ in any of my posts.

GrannyGravy13

Barleyfields

I think that’s wise GG. As I have already said, I am spending much more than usual but not on anything which will increase in value. In the past I have bought a couple of German cars direct from the manufacturer, and may do so again depending on the current importation rules.

High end designer handbags are a good investment as long as original packaging and paperwork is kept, as are watches.

So is Lego!

Barleyfields, it is wrong and undermining to democracy to label political figures as "dictators" for setting out policy proposals related to investment.

You ignore the democratic process and accountability that thankfully enable citizens to engage with and influence these policies.

Critical thinking and constructive discussion around proposed policies are essential in a democratic society. Unfortunately, you seem unable to argue in this way.

Barleyfields

Not content with wanting to merge pension funds (aka unlocking other people’s money contained in them) so that they can be used for larger (riskier?) investments, Reeves now wants to force people to invest in the stock market if they want tax-free interest. I find this degree of meddling in personal finances quite intolerable.

That is just allowing public sector pensions to merge into bigger groups. My public sector pension is in a group anyway so I don't think it will happen but if it makes it more efficient and more profitable where is the problem? And if you haven't got a public sector pension why are you worried about it?

growstuff yes some Lego sets are highly sort after, particularly the short run hugely expensive ones, Star Wars, Hogwarts and the high performance cars.

One of our GS’s has a very large collection, he has kept the boxes, instructions and wherever possible the receipts.

I do have a public sector pension the worried well. However as it’s in payment I am not concerned for myself but for those still working and contributing. The intention is that the larger merged funds will be able to invest in large infrastructure projects. However there has already been a thread about this.

PoliticsNerd

*Barleyfields*, it is wrong and undermining to democracy to label political figures as "dictators" for setting out policy proposals related to investment.

You ignore the democratic process and accountability that thankfully enable citizens to engage with and influence these policies.

Critical thinking and constructive discussion around proposed policies are essential in a democratic society. Unfortunately, you seem unable to argue in this way.

Citizens can only influence policies by voting out a government which refuses to consider a u-turn on a policy which is damaging, PoliticsNerd. I have engaged in plenty of discussion on some of Labour’s current and rumoured policies - even with you, but you have obviously forgotten. The complete refusal of Reeves and Starmer to reconsider policies which are causing harm to some sectors of society, and now the rumoured forced change from cash to stocks and shares ISAs for anyone wishing to have the benefit of the maximum tax-free interest, to pander to the wishes of the City is dictatorial.

Nothing I post on here is undermining to democracy, that is nonsense.

theworriedwell

Barleyfields

Not content with wanting to merge pension funds (aka unlocking other people’s money contained in them) so that they can be used for larger (riskier?) investments, Reeves now wants to force people to invest in the stock market if they want tax-free interest. I find this degree of meddling in personal finances quite intolerable.

That is just allowing public sector pensions to merge into bigger groups. My public sector pension is in a group anyway so I don't think it will happen but if it makes it more efficient and more profitable where is the problem? And if you haven't got a public sector pension why are you worried about it?

They have been looking at the Canadian Pensions model.

"Canadian public sector pension schemes are consolidated into large, professionally-managed funds, allowing for significant investments in diverse assets such as infrastructure and private equity. The country’s leading pension funds, known as the Maple 8, manage approximately C$2tn (£1.1tn) for public sector workers."*

As far as I know, no one sees the Administration in Canada as "dictators".

*Canadian pensions: a model for the UK?

I’m well aware of the Canadian system. However Reeves’s proposal has not been made for the benefit of those saving into public sector pensions but in order to get their money invested into government projects. My public sector pension is well managed and has performed well. Anyway, as I said this has been discussed previously and I mentioned it only as an example of Reeves’s desire to manage other people’s money. I have no desire to derail this thread further.

It is RR’s actual job to manage other people’s money😀. Like it or not, the C of the E role exists to do exactly that.

A Labour government will try to work towards an equal society that balances individual freedom with fairness to the ‘have nots’, as opposed to individualism and profits for the ‘haves’. That is their underlying philosophy, which was democratically voted for, after years of the opposite holding sway.

It stands to reason that tax breaks and incentives will be reconsidered with a view to making things fairer. What did people expect?

I disagree with your first paragraph Doodledog. Her job is to manage the economy, taxation and borrowing and creation of money. She may take money from other people’s pockets, but I fundamentally disagree with extending her reach into their pension funds and reducing safe, tax-free investment choices in order to please the City, not ‘to make things fairer’.

This Labour government shows no signs of performing in accordance with what you believe to be its underlying philosophy. I am not a Labour voter but many who are are bitterly disappointed with their choice.

Nobody is forced to invest in stocks and shares but cash isn’t a good investment, in fact, cash isn’t an investment at all but savings.

In April 2008 you could get a decent return on cash savings. The BoE rate in October 2008 was 4.5% - the same as is it now. But the crash of 2008 meant that interest rates plummetted and stayed historically low for 14 years. A year later, the bank rate is was down to 1%. By March 2020 it was 0.1%.

So not only were cash savers getting next to no income from their savings but the value of that cash continued to be eroded by inflation as the value of cash always is.

An example. In 2010, I decided to use some of my savings which were now earning next to nothing and buy another car. I bought a two-year-old Honda Jazz with only 8,000 miles on the clock from a main dealer. The price was £10,000. I still drive that 58 Reg car. It passes its MOT each year but with an increasing number of flags for things that can’t be fixed cheaply which really isn’t worth it compared to the car’s value. I need to think about changing it.

The question is, would that £10,000 buy me the same car now - or the nearest there is in terms of age, spec and mileage? The simple answer is no. Realistically I’d be looking at having to pay around £14,000.

You could play that exercise with all kinds of consumer goods. What would £10,000 have bought you ten or fifteen years ago and what would it cost to buy that same thing now? That’s how cash erodes in value due to inflation and that’s what Emma Reynolds was driving at in the debate in the House of Lords which has lead to this speculation.

In its Spring Budget 2024, the previous government announced the introduction of the UK ISA. That was going to be a £5,000 allowance, in addition to the existing ISA allowance, to provide “a tax-free savings opportunity for people to invest in the UK, while supporting UK companies”.

Investment managers didn’t like it and welcomed Labour’s decision not to implement it.

www.cityam.com/spring-budget-2024-british-isa-doomed-to-fail-as-new-policy-gets-mixed-reaction/

Also read City AM’s report from 30 October 2024.

www.cityam.com/autumn-budget-2024-british-isa-scrapped/

Reeves had previously called for the ISA allowance to be frozen at £15,000 in 2016, stating that the constant increases in the ISA limit had “only helped those who can save big sums of money every year”.

Reeves also has previously called for a lifetime limit on ISA savings of £500,000 *, though this has received significant pushback, with Baroness Altmann, a crossbench peer and former pensions minister, describing the proposed policy as “terrible” in the run-up to the Budget.

“The real issue lies not in a lack of ISA options, but in the fact that too much capital is currently tied up in low-yielding cash ISAs, which fail to benefit either consumers or the broader economy,” explained Rachael Griffin, tax and financial planning expert at Quilter.

“Encouraging more individuals to invest their savings for the long term—rather than sitting in cash—would bring far greater advantages to the UK as a whole.

I checked back. The source was a piece Reeves wrote for the The Independent in January 2016 when the annual ISA limit was £15,000.

Let’s introduce a lifetime allowance of £500,000 for ISA investments and freeze the annual limit at £15,000 for the remainder of this Parliament.

www.independent.co.uk/voices/britain-remains-addicted-to-debt-and-terrible-at-saving-and-this-has-to-change-a6794121.html

Silverbrooks. The amount which can be saved into any ISA is limited. With a cash ISA, your savings will attract a decent rate of interest and will remain safe, which to many people, especially older people, is important. Money placed in a stocks and shares ISA may or may not grow. At present, there are predictions of a crash. Having experienced both types of ISA, and having also owned shares outside an ISA wrapper, I have reached a point in my life where I no longer wish to be exposed to the whim of the markets. If the value of my investment is significantly eroded, I have little chance at this stage of life of making good the loss. I expect I am by no means alone among my peers, who form a significant part of the voting population, in being risk-averse. Of course this will be of no concern to anyone who doesn’t save, or whose saving capacity is within whatever new limit Reeves may impose on cash ISAs, but in a very volatile world encouraging investment in the stock market is incredibly short sighted. Reeves does seem to have a problem with short sightedness,

So you still have £20,000 a year to invest in ISAs, do you Barleyfields? If so, I'm afraid I don't have much sympathy for you.

AFAIK nobody has suggested removing the tax-free status of existing ISAs, so the value of any investment you already have won't be eroded.

Some people would be delighted to receive £20,000 a year in total - never mind being able to save it.

Why do you think I invest £20k pa in ISAs? I have not said anything about how much, if anything, I now save, nor where I save it. You’re indulging in fantasy.

I am well aware that removal of the tax-free status of ISAs has not been suggested, and I haven’t said that it might happen.

Barleyfields

Not content with wanting to merge pension funds (aka unlocking other people’s money contained in them) so that they can be used for larger (riskier?) investments, Reeves now wants to force people to invest in the stock market if they want tax-free interest. I find this degree of meddling in personal finances quite intolerable.

Is the £20k tax free interest still going to apply to tax stocks and shares ISA?.

Barleyfields

Why do you think I invest £20k pa in ISAs? I have not said anything about how much, if anything, I now save, nor where I save it. You’re indulging in fantasy.

I am well aware that removal of the tax-free status of ISAs has not been suggested, and I haven’t said that it might happen.

If you don't, why on earth do the rumours bother you? You have written of your investment being eroded. Why would it be?

I expect it will, perhaps the amount one can put into a stocks and shares ISA will even be increased, because Reeves wants to push people into investing in shares at the behest of the City rather than saving cash.