Possible changes to ISAs

Mark Morton takes a look at possible changes to ISAs in the run-up to the Spring Statement.

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Transcript

Hello everybody, Mark Morton here. We're getting closer and closer to the spring forecast. Interestingly, you know, the pressure doesn't ease upon the chancellor. Lot of contentious decisions in the budget, as we all know. Pressure starting to grow. And of course, this is still supposed to be the honeymoon period, so. 

Yeah, it'll be really interesting to see what happens in the spring forecast. Now, the government have stated that the spring forecast would be a fiscal statement. May not be a very happy fiscal statement the way things are going, we shall see. But. I think the other aspect of this is we're getting into, again, in the run up to this statement maybe I'm too cynical, but it what it appears to be happening is leaking in the press to test the water with the general public. 

In my mind there was a lot of this that went on prior to the budget, particularly with regard to pensions that. Frighten people, if that's the right expression. And hence there was a lot of activity, people making pension contributions in, you know, because of the fear of, some tax relief on contributions being withdrawn or limited. 

People taking tax-free lump sums out. I would confess I was guilty one, you know, one of the guilty ones on that. But I was worried about a significant reduction in limits. And that's not to say, you know, I'm floating around 268,000 quid, but. I could quite happily see you know, that figure being reduced to 50 grand or 60 grand, which for a lot of people would have no effect whatsoever. 

But of course for those that have tried to save, potentially, there was a lot of money wrapped up in that. And we seem to be getting the same thing this time with, isis. Now the oddity with this in the budget, there was a very specific statement that said, you know, limits would remain unchanged for next year particularly, but into the future to 2030. 

Six months on, less than six months on, we now seem to be seeing the message put out you know, we might restrict the tax relief we might do. Now, of course, the trouble with this is the messaging isn't clear. It is one thing saying from next year we will reduce the amount, which is you are able to save it a tax free, you know, government backed vehicle that is the government's prerogative. 

So that, that is one thing and that may lead to, you know, to a short term spike in people subscribing or maxing out for this year. It is a different thing to merely say we may, you know, limit the tax relief now, you know, what does that mean? Does that mean people are talking about, you know, a retrospective change that ices would somehow become taxable even if you'd subscribe for them 10, 15 years ago? 

I think that would cause a lot of outrage. There is this veiled sort of we'd like to free up money and get it into stocks and shares. Yes. But the point of a cash is. Even if the interest rate is 0.25 of a percent, at least your capital's still there. You know, stocks and shares go down as well as up as we all know. 

And I do find it a really odd thing. I mean, what are we saying here? There won't be cash ices in the future. You will have to put it in the stocks and shares ir as a man, it was sat there through a financial crash watching his pension fund disappear, you know, down the Swanee and again in the pandemic. 

To the regular saver, to compel them to go in stocks and shares would seem, in my mind, a very strange thing to do. I mean, it's the government's prerogative, but the, my worry with all of this, of course, is the fear factor. You know, it's worrying people. But what are we worried about? Nothing specific, just this veiled sort of concept. 

So, we'll see what happens further in the run up to the spring forecast. But the idea that there may not be tax announcements, I think he's getting more and more remote the closer that we get, because again, it is circumstances which are driving. The government and the chancellor, not the other way round which is always a bad position to be in whether you are the government or in fact the consumer or a taxpayer or anything else. 

We may have a very interesting forecast ahead. If you have not done so already please feel free to order our spring forecast statement, which is A-A-P-D-F that you can send out to your clients. The other thing is tax cards. As a man spent many years responsible for tax cards and endless hours, checking numbers and so on. 

It is still one of those printed products that you can hand to a client with a bit of advertising once a year. And I think it's a, it's amazing how many practices I visit where tax cards are sat in the foyer and so on. Get your orders in quick. Otherwise we will wait for bated breath for the spring forecast. 

Take care everybody.