Reeves doesn’t deny plan to slash cash ISA limit

Doodledog

The question is whether people who can afford to save £40k a year should be able to do so with tax free interest, when people working and earning over £12500 are taxed.

There is no right answer to that, I know. But I think the question should be asked.

Obvious answer, in my opinion. Personal allowance must be significantly higher than currently. Additional rate at least 50%.

Barleyfields

Not in a cash ISA if Reeves slashes the maximum annual investment as rumoured Norah. People have to have a very good income to be able to save £20k each pa, after all the usual outgoings and pension contributions.

Of course people need to be on good income to save £20k each pa. However, I can't work out why saving to the future is unacceptable to Reeves.

There are rules as to care fees, people on about costs to heat, food, inflation - I'd think it was wise to save excess outgoings.

The question is whether people who can afford to save £40k a year should be able to do so with tax free interest, when people working and earning over £12500 are taxed.

There is no right answer to that, I know. But I think the question should be asked.

Not in a cash ISA if Reeves slashes the maximum annual investment as rumoured Norah. People have to have a very good income to be able to save £20k each pa, after all the usual outgoings and pension contributions.

It seems people should save to the future. A couple could presumably save £40k pa, acceptable considering care fees and future costs.

Reeves isnt targeting old people the target is anyone with savings, ISAs are very generous with £20k every year tax free, maybe too generous.
As for shares ISAs sometimes you win sometimes you don’t and tend to be longer term to get good return, I don’t like them because I don’t trust “the city”

Older people have a much shorter time frame for stock market dealings to potentially rise. Short term investment is far too risky for the old

I used to trade stocks and shares and have seen how stocks can plunge in seconds

Doesn't seem to target older people and it's not in stone. Perhaps getting finances in order now may be better than worrying?

☹️☹️

I believe that this is a scheme to encourage transfer from cash accounts to stockmarket accounts.

Which is precisely what Murphy said in the extract I just posted...

It could potentially be that this will stop people moving cash ISAs into higher interest cash accounts and anything over 4k would only attract a very low interest rate

I believe that this is a scheme to encourage transfer from cash accounts to stockmarket accounts. This is a very dangerous strategy for anyone who needs stability and safety wrt savings and I include the retired, or soon to be retired

This post by Richard Murphy might give us a clue about this rumour.

ISAs are for the money you can put aside for a while. And again, there are good reasons why people need to put money aside. They are saving for a specific event, or they're just worried about the future. And okay, I accept all that.

Now, I'm going to ignore for the moment the fact that cash savings are not terribly productive when lodged with a bank because banks do not need to have money lodged with them to enable them to make loans to people. That's an issue I've discussed elsewhere. Search the videos that I've made on how money is created, and you'll find more about that.

^ What I'm worried about is the fact that right now, the City of London is moving against cash ISAs. And overall, cash ISAs are more popular than share ISAs .^

In fact, most things are more popular than anything to do with shares in the UK economy because people don't see a lot of reason to save in stocks and shares anymore. And the reason why is, well frankly, the London Stock Exchange is not actually giving people the greatest of options as to how they want to save. They are desperate to have more money come into the stock exchange right now because they want to push up its value.

They don't want to create more shares for people to buy. They want more money to come in to buy the existing shares because that pushes up the value of the existing shares because demand for them goes up. And that then makes everybody in the City feel very good because they get bonuses on the basis of increasing share prices or increases in the value of the money that they are managing in the share portfolios of people who've got ISA and other such accounts.

It's payday for the City time when share prices go up and they're so desperate for them to go up they're now saying that people should not be allowed to save in cash in ISAs. They're saying the government should not be subsidising that saving.

They're not attacking pension funds, which, of course, don't use ISAs because pension funds give them the boost they want in other ways.

They're attacking cash ISAs because they're a simple product that people understand and want, and which they need, and where they don't want the risks that a share-based saving creates, and, as a consequence, the City hates them.

www.taxresearch.org.uk/Blog/2025/02/20/the-city-wants-an-end-to-cash-isas-and-that-would-be-a-mistake/

Also on youtube

www.youtube.com/watch?v=aH-QLURD6GY&t=10s

Unfortunately, Reeves appears to be led by the nose by The City. If they don't want cash ISAs she'll do as she's told.

I doubt existing holdings would be affected, any changes will be to new ISAs taken out after April 6th - if anything happens at all. In the short term it wouldn’t be much of a money spinner.

I can see why the government might want to expect people with hundreds of thousands in ISAs to pay tax on the interest. Maybe a better way would be to limit the total amount that can be held tax-free, rather than the annual amount that can be contributed?

I guess so FriedGreenTomatoes2, and some older people probably move money from a different savings pot into a ISA, but surely the vast majority of ISAs are taken out by working people, so claiming that older people would be specifically targeted isn’t true.

Sigh.

Just read the Martin Lewis article

www.walesonline.co.uk/news/cost-of-living/martin-lewis-responds-worries-over-31020730#

FriedGreenTomatoes2

Casdon

mum2three

Why is she targeting old people? It all sounds rather spiteful and deliberate. Has she had a bad experience with older people? Was she left out of someone's will perhaps?

I don’t follow your logic there, older people have generally already accumulated their savings when they were working, and no longer have new income to invest, so surely it’s working people who are saving into ISA’s?

New income can of course come through during pensionable years through inheritances from very elderly relatives! I know of a few of my peers who have gotten £££s that way in the last 18 months.

That's true - ISAs can be used by people of any age - even if it's true, it is scarcely targeting old people, is it?

Casdon

mum2three

Why is she targeting old people? It all sounds rather spiteful and deliberate. Has she had a bad experience with older people? Was she left out of someone's will perhaps?

I don’t follow your logic there, older people have generally already accumulated their savings when they were working, and no longer have new income to invest, so surely it’s working people who are saving into ISA’s?

New income can of course come through during pensionable years through inheritances from very elderly relatives! I know of a few of my peers who have gotten £££s that way in the last 18 months.

mum2three

Why is she targeting old people? It all sounds rather spiteful and deliberate. Has she had a bad experience with older people? Was she left out of someone's will perhaps?

How is this targeting old people? You have to be 18 to have an ISA, or a parent/guardian can open one for you if you are younger. Lifetime and RTB ISAs (or whatever they are called) have an upper age limit so are not available to old people. Even if this happens, which it might not, there is no ageism whatsoever.

I don't know what I think about the idea. It does seem mad that people who can afford to can save £20 every year tax free, when the point of ISAs was to encourage small savers. OTOH, taxing savings from earned income is a double whammy.

mum2three

Why is she targeting old people? It all sounds rather spiteful and deliberate. Has she had a bad experience with older people? Was she left out of someone's will perhaps?

I don’t follow your logic there, older people have generally already accumulated their savings when they were working, and no longer have new income to invest, so surely it’s working people who are saving into ISA’s?

mum2three

Why is she targeting old people? It all sounds rather spiteful and deliberate. Has she had a bad experience with older people? Was she left out of someone's will perhaps?

What is spiteful and deliberate, mum2three, is the press scaring and alarming people!

Martin Lewis on rumours

"Martin Lewis stated: "There is no news, there's lots of speculation written up as news, but absolutely zilch has been announced."
www.walesonline.co.uk/news/cost-of-living/martin-lewis-responds-worries-over-31020730#

This is typical scaremongering. Asking a politician" do you deny that" blah blah

took us through last summer when we were plagued by rumours of cutting one person council tax allowances, prescription charges, and lots more.

Its all about attacking the government by the right wing newspapers, and as Martin Lewis himself said 'speculation written up as news"

Why is she targeting old people? It all sounds rather spiteful and deliberate. Has she had a bad experience with older people? Was she left out of someone's will perhaps?

I suggest anyone thinking of opening an ISA before the end of the current tax year does so pretty damn quick.

That will prove unpopular but that doesn't seem to bother her. Labour party seem to want to tax everything.