Only last week I wrote a post explaining why I think money saved into ISAs is safer from the government than money saved into pensions.It sounds perfectly sensible, but all it actually does is prove how even someone as consistently cynical as I am can underestimate the idiocy of governments.
According to the Sunday Telegraph, the Treasury has been doing a few of the things I anticipated last week. It has for example been "gauging opinion" on slashing the amount of tax free cash people can take from their pensions. But it has also been discussing dealing with what the paper calls the "concerns" about ISA millionaires, with a cap on the total amount one can save into an ISA of £100,000.
I can see how this might make sense from a numbers point of view. It must be maddening for HMRC to see people withdrawing capital and income from their ISAs entirely tax free (the tax on the money having been paid in full before they entered the wrapper) and it also fits nicely with the new trend for demonising anyone you can tag as remotely rich.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
But it is still a very bad idea. Why? Because everyone loves ISAs. Tens of millions of people save into them, understand them and trust them. Why would any government want to mess with a savings vehicle that works that well? If only they could just sometimes let a good thing alone.
PS I also wonder what's up the idea with capping of totals, rather than contributions. If you wanted to reduce the amount of money in ISAs (which you probably shouldn't) you'd surely be better to cap the amount going in (cutting the annual allowance or some such). Trying to cap the final outcome which is dependent on investment returns just leads to confusion and uncertainty. Just ask anyone trying to figure out the lifetime allowance system for pensions.
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
Value is starting to emerge in the marketsOpinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
