Labour tax policies?

ISA tax breaks vulnerable to McConnell?

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The total funds invested in ISA'st today are just short of £600bn, per the latsst government figures.

[https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil....

  This must be the lowest hanging fruit for addotional tax grabs. A stroke of the pen scrapping the tax exemptions for ISAs would raise probably £3bn+.income tax and , depending how the legislation might be worded, very significant CGT as well-except that the impact on markets could wipe out many unrealised gains first.

 

 

Any views

Replies (9)

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By Duggimon
04th Dec 2017 14:17

I think McConnell is unlikely to wipe out the tax free status of ISAs for a number of reasons, the most pressing of which is that he's not the chancellor and likely never will be.

Other reasons include it being unfair, unfeasible and against the party manifesto since ISAs are targeted at people with small levels of savings.

For most of the people who have ISAs, the government would have to wipe out the personal savings nil rate band to bring the interest into tax at all which again, as a tax break that aids lower income families, is somewhat protected by their manifesto.

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By Montrose
04th Dec 2017 14:20

But those in the basic rate band would hardly be affected.

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By Montrose
04th Dec 2017 14:20

But those in the basic rate band would hardly be affected.

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By Duggimon
04th Dec 2017 16:36

I've had a think and I reckon everyone would hardly be affected, it's a stupid idea. How did you work out the potential revenue of £3bn?

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By Montrose
05th Dec 2017 16:30

£600bn. @say 2% yield generates £12bn income. Suppose half are higher rate taxayers, ignoring 45% band for simplicity. .

Use a simple extra 20% would generate £bn. In reality probably more, as for dividends likely to be 37.5% for many of those higher rate taxpayers.

You could as HMRC for the calculation-but I wouldn't suggest it!

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By Montrose
05th Dec 2017 16:30

£600bn. @say 2% yield generates £12bn income. Suppose half are higher rate taxayers, ignoring 45% band for simplicity. .

Use a simple extra 20% would generate £bn. In reality probably more, as for dividends likely to be 37.5% for many of those higher rate taxpayers.

You could as HMRC for the calculation-but I wouldn't suggest it!

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By Portia Nina Levin
04th Dec 2017 14:31

Isn't it all somewhat academic? If we ever see a Corbyn/McConnell government the nation will be right royally f u c k e d, in any event.

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By Montrose
04th Dec 2017 16:52

NPL

Accepting that McConnell is nearer to Maduro than to Tony Blair, we still have to learn to manage our affairs in the real world.

Any defensive measures taken today could be worthwhile. Perhaps the simplest would be to crystallise unrealised gains within any ISA's held-the relevant securities can be repurchased after 30 days within the ISA.

Non sterling securities may generally be more attractive if sterling falls out of bed even further than the relatively small drop post the Brexit vote.

Even though exchange control is back on the Agenda[post Brexit and with a Corbyn Government] consideration could be given now to transferring cash to major international bank accounts outside the UK/IOM/Channel Isles.

How about emigration-the example of the flood of those who left France with a wealth tax is a precedent?

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By andy.partridge
04th Dec 2017 17:16

Surely there is some more mileage in shafting the soft-bellied small business owner and 2nd home owner? No protests, no campaigns, just meek acquiescence. Easy.

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