ISA are top limits likely to be set?

[1nvest]

US Roth IRA are I believe similar to our ISA. Now that some/one now has 5 BILLION in theirs, how long before Roth/ISA's come under review?

https://www.propublica.org/article/lord ... piggy-bank

[Alaric]

US Roth IRA are I believe similar to our ISA.

Isn't the closer parallel betweens IRAs and SIPPs? These are restricted by the lifetime limit.

Is there any evidence of UK investors being able to manipulate ISAs to accumulate vast sums in the manner the article suggests for US Roth IRAs?

[Spet0789]

US Roth IRA are I believe similar to our ISA.

Isn't the closer parallel betweens IRAs and SIPPs? These are restricted by the lifetime limit.

Is there any evidence of UK investors being able to manipulate ISAs to accumulate vast sums in the manner the article suggests for US Roth IRAs?

Roth IRAs allow privately held stock to be added. As its value is often opaque, huge gains can then be made. Specifically, Peter Thiel put nearly 2 million PayPal shares in based on their book value which was a few k. One year later, they were worth many millions.

In contrast, ISAs (IIRC) only allow stocks listed on a proper exchange to be included, so this sort of thing is far, far less likely.

[Lootman]

US Roth IRA are I believe similar to our ISA.

Isn't the closer parallel betweens IRAs and SIPPs? These are restricted by the lifetime limit.

I would contend that the closest UK equivalent to a Roth IRA is an ISA because in both cases there is no tax relief on contributions, but all profits and withdrawals are tax-free. The IRA is a retirement account and so you cannot make tax-free withdrawals before the age of about 60, whereas with ISAs you can make a withdrawal at any time. But otherwise they work similarly.

A regular US IRA is more like a UK SIPP: tax relief on the way in but taxable on the way out.

Is there any evidence of UK investors being able to manipulate ISAs to accumulate vast sums in the manner the article suggests for US Roth IRAs?

Harder but not impossible. You could buy a sprinkling of AIM shares and hope that one of them takes off to the moon. There are by now probably thousands of UK investors with million pound ISAs - I am not far off myself. Maybe a few with 8 figure ISAs? Not sure I would use the word "manipulation" however. ProPublica is currently declaring war on successful and prosperous people so I take their rants with a pinch of salt.

[GeoffF100]

In contrast, ISAs (IIRC) only allow stocks listed on a proper exchange to be included, so this sort of thing is far, far less likely.

That ceased to be true in August 2013:

https://www.barclays.co.uk/smart-invest ... -your-isa/

I expect the fiddle is float your profitable business on the AIM, with dodgy accounts that show it to be unprofitable. The market price of the shares is low as a result, and you buy most of the shares in your ISA. You subsequently declare the correct profits and the share price rises mightily.

[scrumpyjack]

High value ISAs are great for HMRC as they encourage people to keep their money in the ISA which will then be subject to IHT in the end.

[Lootman]

High value ISAs are great for HMRC as they encourage people to keep their money in the ISA which will then be subject to IHT in the end.

Yes, it is a very cunning plan. You save as little as 7.5% tax on dividends and 10% on CGT. And then you drop dead and the government scoops up 40% of the entire value!

Which raises the question of at what age should one liquidate an ISA, thereby enabling one to start engaging strategies to make IHT go away. I am wrestling with that question right now.

[everhopeful]

There is of course the Additional Permitted Subscription which allows the ISA to transfer to surviving spouse tax free. This at least potentially delays the IHT.

[Gan020]

High value ISAs are great for HMRC as they encourage people to keep their money in the ISA which will then be subject to IHT in the end.

Yes, it is a very cunning plan. You save as little as 7.5% tax on dividends and 10% on CGT. And then you drop dead and the government scoops up 40% of the entire value!

Which raises the question of at what age should one liquidate an ISA, thereby enabling one to start engaging strategies to make IHT go away. I am wrestling with that question right now.

Agreed, but if you live to over 75, which I fully intend to, they scoop up the IHT on your SIPP too, although there are some strategies to delay the tax if the beneficiary does not want to spend it.

I have come to realise that the best plan to deal with IHT is to spend my pot.

[ursaminortaur]

High value ISAs are great for HMRC as they encourage people to keep their money in the ISA which will then be subject to IHT in the end.

Yes, it is a very cunning plan. You save as little as 7.5% tax on dividends and 10% on CGT. And then you drop dead and the government scoops up 40% of the entire value!

Which raises the question of at what age should one liquidate an ISA, thereby enabling one to start engaging strategies to make IHT go away. I am wrestling with that question right now.

Agreed, but if you live to over 75, which I fully intend to, they scoop up the IHT on your SIPP too, although there are some strategies to delay the tax if the beneficiary does not want to spend it.

I have come to realise that the best plan to deal with IHT is to spend my pot.

Which the government helps with by requiring anyone with more than modest savings to fully fund their care in later years

[pje16]

I have come to realise that the best plan to deal with IHT is to spend my pot.

Or give chunks to family menmbers and live for 7 years

[Lootman]

I have come to realise that the best plan to deal with IHT is to spend my pot.

Or give chunks to family members and live for 7 years

One great thing about TLF is that a top post about Lefties whining about affluent people maximising tax breaks becomes, within less than 10 posts, affluent people swapping tips about maximising tax breaks!

[scrumpyjack]

Yes and Peter Thiel (the guy with the $5 billion Roth IRA) will get hammered eventually for the US Estate tax as the tax free band in the US is 'only' $5.3 m (compared to our £325k), unless he gives it to charity first.

[Lootman]

Yes and Peter Thiel (the guy with the $5 billion Roth IRA) will get hammered eventually for the US Estate tax as the tax free band in the US is 'only' $5.3 m (compared to our £325k), unless he gives it to charity first.

According to Forbes in 2021 Thiel had a net worth of $5.1 billion. So if the Sanders supporters at ProPublica are to be believed then Thiel only has a lousy $100 million outside of his Roth IRA. They claim that 98% of his net worth is in his Roth. Not sure I believe that.

But at least California does not have its own estate tax, which 12 states do, and which is on top of the 40% that Uncle Sam takes. Overall I can't help but believe that the US is seeing a big profit on Thiel's immigration there from Germany regardless of when that $5 billion gets taxed.

[1nvest]

Yes and Peter Thiel (the guy with the $5 billion Roth IRA) will get hammered eventually for the US Estate tax as the tax free band in the US is 'only' $5.3 m (compared to our £325k), unless he gives it to charity first.

That's what Gates and Buffett do. Set up a charity/foundation into which their wealth is gifted, and where they/heirs/partner remain in control of the charity.

[Spet0789]

In contrast, ISAs (IIRC) only allow stocks listed on a proper exchange to be included, so this sort of thing is far, far less likely.

That ceased to be true in August 2013:

https://www.barclays.co.uk/smart-invest ... -your-isa/

I expect the fiddle is float your profitable business on the AIM, with dodgy accounts that show it to be unprofitable. The market price of the shares is low as a result, and you buy most of the shares in your ISA. You subsequently declare the correct profits and the share price rises mightily.

AIM stocks are still LSE listed.

[EthicsGradient]

High value ISAs are great for HMRC as they encourage people to keep their money in the ISA which will then be subject to IHT in the end.

Yes, it is a very cunning plan. You save as little as 7.5% tax on dividends and 10% on CGT. And then you drop dead and the government scoops up 40% of the entire value!

Which raises the question of at what age should one liquidate an ISA, thereby enabling one to start engaging strategies to make IHT go away. I am wrestling with that question right now.

Agreed, but if you live to over 75, which I fully intend to, they scoop up the IHT on your SIPP too, although there are some strategies to delay the tax if the beneficiary does not want to spend it.

I have come to realise that the best plan to deal with IHT is to spend my pot.

No, they don't charge IHT after 75 either. The difference is that, before 75, the whole value of a SIPP can be transferred to a beneficiary with any tax; after 75, any withdrawal by the beneficiary counts as their income, so is subject to income tax at their marginal rate (as it was for you before you died). They can withdraw over many years, if that keeps them in a lower bracket. And they won't get the 25% tax-free lump sum, even if you hadn't taken it yourself. But it's never IHT.

https://www.onlinemoneyadvisor.co.uk/pe ... ipp-death/
https://www.talbotmuir.co.uk/knowledge- ... -benefits/
https://www.sharesmagazine.co.uk/articl ... r-iht-bill