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Rachel Reeves and Cash ISAs

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stevensfo
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Rachel Reeves and Cash ISAs

#709609

Postby stevensfo » February 4th, 2025, 6:43 am

Article from The Telegraph

Approximately £300bn sits unproductively in this absurdly generous savings pot, offering shelter from the taxman to the tune of £20,000 every single year per adult, for no benefit to the government.


https://uk.finance.yahoo.com/news/cash- ... 56132.html

....sits unproductively in this absurdly generous savings pot,......This is unacceptable – every tax break comes at a cost to the Government and each one should result in a net gain for the nation.


Scuse my ignorance, but the banks that take the money and offer derisory albeit tax-free rates in return are surely not parking the cash in suitcases under their beds, are they?
If they didn't make money form this cash, then they wouldn't offer them.

Steve - hardly anything in Cash ISAs these days.

Gerry557
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Re: Rachel Reeves and Cash ISAs

#709620

Postby Gerry557 » February 4th, 2025, 7:49 am

I didn't realise that people might save up for something and then spend it. Instead we just put money into ISA's forever for no purpose.

Sounds like she want to scrap it.

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Re: Rachel Reeves and Cash ISAs

#709627

Postby Gersemi » February 4th, 2025, 8:34 am

I think if Reeves were to scrap the "unproductive" cash ISAs and maintain the (presumably) "productive" Stocks and Shares version that would be a very bad look, as those benefitting from Cash ISAs are generally poorer members of society compared to those with Stocks and Shares versions.

Actually given her policies so far that looks quite likely!

stevensfo
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Re: Rachel Reeves and Cash ISAs

#709636

Postby stevensfo » February 4th, 2025, 8:59 am

Gersemi wrote:I think if Reeves were to scrap the "unproductive" cash ISAs and maintain the (presumably) "productive" Stocks and Shares version that would be a very bad look, as those benefitting from Cash ISAs are generally poorer members of society compared to those with Stocks and Shares versions.

Actually given her policies so far that looks quite likely!


as those benefitting from Cash ISAs are generally poorer members of society compared to those with Stocks and Shares

I don't know if that's true any more. I use AJBell fixed rate savings and Monzo instant access accounts, and the Cash ISAs offer worse rates than non-ISA saving accounts. Bearing in mind the amount needed to get to the 1000 pound savings allowance, you'd need a hefty sum in the Cash ISA.

https://monzo.com/features/savings Personal .... Savings....Compare saving accounts
https://www.ajbell.co.uk/cash-savings-hub

Steve

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Re: Rachel Reeves and Cash ISAs

#709663

Postby Redmires » February 4th, 2025, 10:07 am

Typical torygraph propaganda. It's nothing to do with Rachel Reeves, authored by a 'Baxter-Derrington', whoever they are. I wonder what their agenda is ?

DrFfybes
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Re: Rachel Reeves and Cash ISAs

#709680

Postby DrFfybes » February 4th, 2025, 11:43 am

Redmires wrote:Typical torygraph propaganda. It's nothing to do with Rachel Reeves, authored by a 'Baxter-Derrington', whoever they are. I wonder what their agenda is ?


Former "Investment Week" editor, firm believer in investing in Equities. Presumably he thinks cash savings are a waste of time and so if you disagree with him you shouldn't get the same tax breaks as those who invest in the UK economy, or at least those who invest circa 3% (?) of their money in the UK by way of a tracker fund :)

Coming soon "Telegraph call scrap to Premuim Bonds tax free status and gambling tax to be deducted from winnings".

Paul

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Re: Rachel Reeves and Cash ISAs

#709681

Postby swill453 » February 4th, 2025, 11:45 am

Redmires wrote:Typical torygraph propaganda. It's nothing to do with Rachel Reeves, authored by a 'Baxter-Derrington', whoever they are. I wonder what their agenda is ?

Yeah, the only mention is that Reeves "didn't rebuff" the idea. Maybe nobody consulted her...

Scott.

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Re: Rachel Reeves and Cash ISAs

#709699

Postby CliffEdge » February 4th, 2025, 1:21 pm

Seems obvious that the "fuel allowance thief" Reeves will emasculate ISAs. Envy knows no boundaries.

the0ni0nking
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Re: Rachel Reeves and Cash ISAs

#709702

Postby the0ni0nking » February 4th, 2025, 1:39 pm

Given you can convert Cash ISAs into a S&S ISA, I'm not sure how they would just go after Cash ISAs - as you'd just migrate them across.

I appreciate some providers don't pay the same level of interest on their S&S ISA as their Cash ISA but some do - in which case, any legislation would have to either mandate interest in ISAs generally or put a restriction on the length of time cash could be held in an ISA.

If they were to do either - my parents would get stung by this - bearing in mind I have PoA over both their affairs, I'd act accordingly (PETs & Investments most likely) so as to minimise any government take.

It's not been an issue for the 2010s as interest rates have been pitiful - it wouldn't seem fair to therefore go after something due to changes in the macro-environment but then everyone has a different view of what fairness constitutes etc.

As has been pointed out elsewhere, the support seems to be coming from those with a vested interest in increasing take up of S&S ISAs and doesn't seem to me to be at the forefront of the current Chancellor's mind. If people want lower risk and likely lower returns (Cash ISA v S&S ISA) then that's a choice for them.
Last edited by the0ni0nking on February 4th, 2025, 1:43 pm, edited 2 times in total.

Arborbridge
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Re: Rachel Reeves and Cash ISAs

#709703

Postby Arborbridge » February 4th, 2025, 1:40 pm

stevensfo wrote:Article from The Telegraph

Approximately £300bn sits unproductively in this absurdly generous savings pot, offering shelter from the taxman to the tune of £20,000 every single year per adult, for no benefit to the government.


https://uk.finance.yahoo.com/news/cash- ... 56132.html

....sits unproductively in this absurdly generous savings pot,......This is unacceptable – every tax break comes at a cost to the Government and each one should result in a net gain for the nation.


Scuse my ignorance, but the banks that take the money and offer derisory albeit tax-free rates in return are surely not parking the cash in suitcases under their beds, are they?
If they didn't make money form this cash, then they wouldn't offer them.

Steve - hardly anything in Cash ISAs these days.


We should note that this is an opinion piece by the Telegraph - it has no connection with Reeves apart from saying she didn't immediately reject the idea. Well, what chancellor would give a hostage to fortune (she is probably fed up with dfoing that :D ).
For whatever reason the Telegraph believes it would be good to get rid of cash ISAs and is encouraging Reeves to think in that direction.
I can think of one reason why they might want her to:- so they can criticise her for doing so later on!

BTW, one of their reasons is that cash savings do nothing for the nation. Well, I have news for them - every pound saved by individuals eventually saves money for the nation in terms of nursing home fees.

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Re: Rachel Reeves and Cash ISAs

#709708

Postby DrFfybes » February 4th, 2025, 1:55 pm

CliffEdge wrote:Seems obvious that the "fuel allowance thief" Reeves will emasculate ISAs. Envy knows no boundaries.


Why would she be envious? - I'd have thought most MPs would have rather substantial ISAs.

Paul

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Re: Rachel Reeves and Cash ISAs

#709716

Postby U962 » February 4th, 2025, 3:00 pm

In this event I'd guess that the providers would simply provide some enhanced money market type funds with some sort of semi gurarantee attached so as to make them next to identical to cash ISA's as we know them today.
...and the banks and Building Societies would all cry 'foul'!

I could though see them restricting the amount you can put into a cash ISA each year while leaving the total you can put into an ISA per year the same. Actually, and I may be mistaken but a sorta recall that right at the begining of ISA/PEP's this was actually the case.

Arborbridge
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Re: Rachel Reeves and Cash ISAs

#709725

Postby Arborbridge » February 4th, 2025, 3:58 pm

U962 wrote:In this event I'd guess that the providers would simply provide some enhanced money market type funds with some sort of semi gurarantee attached so as to make them next to identical to cash ISA's as we know them today.
...and the banks and Building Societies would all cry 'foul'!

I could though see them restricting the amount you can put into a cash ISA each year while leaving the total you can put into an ISA per year the same. Actually, and I may be mistaken but a sorta recall that right at the begining of ISA/PEP's this was actually the case.


For every chancellor it "Fiscal drag to the rescue!"

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Re: Rachel Reeves and Cash ISAs

#709728

Postby Alaric » February 4th, 2025, 4:15 pm

the0ni0nking wrote:Given you can convert Cash ISAs into a S&S ISA, I'm not sure how they would just go after Cash ISAs - as you'd just migrate them across.


The original rules had it that you couldn't hold cash in a S&S ISA for an extended period. If you sat on your hands without investing or reinvesting the provider would write to you, telling you to get on with it. In the context Gilts under 5 years and perhaps similar corporate bonds also counted as cash. The rules were changed to harmonise Cash and S&S ISAs although I forget quite when and which Chancellor.

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Re: Rachel Reeves and Cash ISAs

#709731

Postby Lootman » February 4th, 2025, 4:23 pm

Gersemi wrote:I think if Reeves were to scrap the "unproductive" cash ISAs and maintain the (presumably) "productive" Stocks and Shares version that would be a very bad look, as those benefitting from Cash ISAs are generally poorer members of society compared to those with Stocks and Shares versions.

Is there a clause in the official book on tax policy that says that any and all changes to tax policy can only favour and benefit the poor?

By definition tax cuts benefit the better off because only the better off pay significant amounts of tax in the first place.

The purpose of taxation is to fund the government. It is not, and should not, be just another arm of welfare and ideologically-driven wealth redistribution.

So I guess the real question is whether Labour really has changed its spots?

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Re: Rachel Reeves and Cash ISAs

#709763

Postby Arborbridge » February 4th, 2025, 6:52 pm

Lootman wrote:
Gersemi wrote:I think if Reeves were to scrap the "unproductive" cash ISAs and maintain the (presumably) "productive" Stocks and Shares version that would be a very bad look, as those benefitting from Cash ISAs are generally poorer members of society compared to those with Stocks and Shares versions.

Is there a clause in the official book on tax policy that says that any and all changes to tax policy can only favour and benefit the poor?

By definition tax cuts benefit the better off because only the better off pay significant amounts of tax in the first place.

The purpose of taxation is to fund the government. It is not, and should not, be just another arm of welfare and ideologically-driven wealth redistribution.

So I guess the real question is whether Labour really has changed its spots?


Welfare (in the widest sense) is part of government. It helps the rich too, to have people well off enough to spend money.

About wealth distribution - that is an interesting topic. Perhaps it is part of government's function to distribute wealth which is often gained by an imbalance in power. Not that one would expect the wealthy to agree!

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Re: Rachel Reeves and Cash ISAs

#709793

Postby Maroochydore » February 4th, 2025, 8:37 pm

DrFfybes wrote:Coming soon ................ and gambling tax to be deducted from winnings".

There used to be, it was scrapped in 2001 or rather the tax was moved from the punter to the betting companies.

As I recall it was 10% and one could pay it on your stake or pay it on your winnings. Obviously paying on your stake meant a smaller tax amount of tax if you were confident you were going to win. I paid 10p tax on a stake once and saved myself over £1500 tax on an acca which came up.

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Re: Rachel Reeves and Cash ISAs

#709794

Postby Lootman » February 4th, 2025, 8:40 pm

Maroochydore wrote:
DrFfybes wrote:Coming soon ................ and gambling tax to be deducted from winnings".

There used to be, it was scrapped in 2001 or rather the tax was moved from the punter to the betting companies.

As I recall it was 10% and one could pay it on your stake or pay it on your winnings. Obviously paying on your stake meant a smaller tax amount of tax if you were confident you were going to win. I paid 10p tax on a stake once and saved myself over £1500 tax on an acca which came up.

That only sounds fair to me only if gambling losses attracted tax relief.

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Re: Rachel Reeves and Cash ISAs

#711511

Postby U962 » February 13th, 2025, 1:43 pm

Maybe I'm a bit thick...but.

Cash deposited via a Cash ISA in a bank/building Soc etc is used indirectly to finance their lending out to individuals and corporates, so its hardly "unproductive" as the original quoted D.Telegraph press statemement made out

While cash deposited in a stocks and shares ISA is used to buy (usually) funds which themselves buy shares in companies and the money used to buy those shares goes nowhere near the company who shares are bought but is paid to the person(s) who is selling the shares. All the company sees is a different person to pay the dividends to.
The only way the company gets more money is if they do a rights issue. They may well be able to borrow more at less interest if their shares go up from all the people buying the shares as the capitalisation is now higher.

So it seems from all of this that cash ISA's are more "productive" than stocks and shares isa's.

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Re: Rachel Reeves and Cash ISAs

#711523

Postby the0ni0nking » February 13th, 2025, 3:09 pm

It's interesting to observe the differing headlines for the same article.

Online, the i ran an opinion article by Hamish McRae which was titled:

"Don't panic about cash ISAs - this is what you really need to do with your savings"

Link (paywalled):
https://inews.co.uk/opinion/dont-panic- ... gs-3532677

The actual article in the paper is titled:

"Reeves might actually do savers a favour by ending the cash ISA"

For those not bothered about reading it - it basically re-states the underlying principle that returns on the stock market have bettered cash savings returns. It also references that the original PEPs was intended to extend share ownership and it was only the subsequent introduction of TESSAs that widened the tax exemption.

PEPs pre-date me so I've no idea whether you could hold cash in them as simply as you can hold cash in an S&S ISA nowadays - I do suspect it's easier nowadays than back in 1986 but no real knowledge.


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