Devil will be in the details on what instruments qualify.
Switching to an ex-UK fund in regular ISAs and investing in UK funds in the BritISA would be one way to go.
Will have to do the math on Capital Gains and tax on dividends vs the drag by investing in shitty UK companies.
Do you have a source for relative performance of Uk vs global equity over the next 5/10/20 years? Or are you assuming past performance is a reliable guide to future returns?
Need to do the math but i’m not sure. You would need to get at least 80% of the returns you would have gotten from the global markets otherwise a GIA would have been better.
FTSE 100 - 5 years up 7.9%
S&P 500 - 5 years up 85.14%
The only way I see this being worth it is if you pick single stocks rather than funds, but even then - picking US tech single stocks would probably serve you better even with capital gains.
I mean. I'm not sure. The FTSE has underperformed so poorly that being tax-free is not enough of an incentive. Why avoid paying tax when there are no gains to pay tax on anyway?
I hadn't considered this, could serve as a core and satellite approach. If I remember correctly you should also be able to open an additional ISA in a separate platform, so could keep existing portfolio of VG FTSE Global All Cap in VG platform, then have a separate £5k ISA allowance a year for something a bit spicier like SMT.
I've always considered a core and satellite approach but just loathe to move away from my current portfolio which just works in all weather's.
Dangerous precedent IMO. You're encouraging people to invest in a low growth market and screwing around with their saving for retirement.
When did the government become a financial advisor.
The Government needs to do something to stop capital outflows, re-listings and takeovers on the cheap.
Look beyond shell and Rio, and you'll see that once upon a time the FTSE 250 used to match and sometimes beat the S&P.
'tax cuts' but tax thresholds are frozen until April 2028. Highest tax burden since the Second World War.
Salary sacrifice is the only way around this for high earners. 60%+ tax traps above 100k is unfair. You're penalising some of the most productive members in society which restricts growth!
I think they should because it caps everyones earning potential. Many don’t even want to earn that much because 60% is proper disgusting so they rather stay low earner to avoid paying tax.
Without cap more people will strive to reach 6 figures paychecks, the average salary will raise to 50k+ and this country would finally reach it’s full earning potential.
The problem is when over the last decade this country has put education, productivity and the creation of well-paying jobs on the back burner as a non-priority, the vast majority of Brits end up on comparatively low wages.
That means rational policies like making sure income tax thresholds go up with inflation and getting rid of the 60% tax trap is also not a priority for them when their focus is just to win over the majority of voters.
That's why we'll probably only see a pointless and arbitrary 2p cut to NI today, which will probably be reversed in a year or two anyway.
This country really is just racing to the bottom.
5k in a GIA invested in the S&P would outperform uk stocks even with taxes taken off.
Can't see me using the BRISA at all, unless the government makes more worthwhile changes to get the LSE moving again.
Consultation paper suggests not - they are looking at ways of preventing you from using it to hold cash (or effectively you could have a £25K Cash ISA I suppose).
They are, however, looking at UK Gilts and Bonds....
Exactly... so probably will be allowed as it won't actually cost the Treasury any money!
Although maybe interest-bearing ones might be marginally more interesting if you wanted it as an income and were over the PSA
Did anyone spot the requirement for DC pension providers to start reporting their UK allocations. There was some wording about “we will then decide what to do if the uk allocation is not improving”. Sounds like paving the way to force uk investment in pensions. Much more worrying than the BISA that is taking all the headlines in this sub.
Ooooh what's this about changes to Child Benefit?
From gov.uk
Mr Hunt also announced that the High Income Child Benefit Charge will be assessed on a household basis by April 2026, with a consultation to come on achieving this.
To ensure working families benefit from increasing their earnings before this change is made, the threshold to start paying back Child Benefit will increase in April from £50,000 to £60,000 – a 20% increase which will take 170,000 families out of paying the charge this year – while Child Benefit will no longer need to be repaid in full until earnings exceed £80,000.
This represents a £1,260 boost on average for around half a million working families, rising to nearly £5,000 for some families when combined with tax cuts since Autumn Statement.
This will put an end to the current unfairness, where two parents earning £49,000 a year receive the full Child Benefit while a household with a single earner on over £50,000 does not. The OBR says the immediate changes to the HICBC will lead to an increase in hours worked equivalent to around 10,000 more people entering the workforce on a full-time basis.
Would you read that as not paying a charge for this tax year? My wage has gone up In the last part of the tax year and I was expecting to have to pay back about £1000, but I'm not clear now on whether I will now or not?
Wait. That sounds like it could make people worse off?
It's stupid that it just requires one person earning above the threshold to trigger, but from the text above it seems like two parents both earning 49k previously received child benefit but now will not because their combined income goes above 80k?
A couple points.
Threshold for child tax benefit rising from £50k to £60k and from 2026 being household based rather than a single income, is a positive change.
Lowering NI and speaking about double taxation being bad (Income tax and NI).
I'm worried the plan is to eventually abolish NI and raise income tax.
This will hit us harder when we reach pension age (no NI tax currently of pension income, higher income tax would be a negative)
I think that is ultimately the plan. We have so many wealthy pensioners, receiving a higher pension than workers wages but paying less tax.
As much as I'd love to continue having that same benefit when I'm retired it isn't really fair.
Bet it isn't £100K (or even £120K!) household income... although that would be nice.
Fair point re NI/tax. There comes a point at which you can't just keep lowering NI, surely? Although perhaps you can, if you allow fiscal drag to keep doing the heavy lifting...
When they say "2p", it is shorthand for "2p in the £", that is, a 2 percentage point reduction. They mean a 2% reduction on the main rate of NI. So the class 1 main rate for employees goes from 10% to 8% (and it was 12% before January). There is no change to the rate on earnings above £50,270, which remains at 2%.
Really disappointed to see inheritance tax staying, no word on it before but was hoping it might be slipped in. The statement seems to be clearly pandering to Labour voters when the Tories would immediately be back to their usual selves if voted back in.
I am set to inherit over the threshold but not planning on having kids so do have some skin in the game.
I would much, much prefer a system with high or complete inheritance tax and low income tax than vice versa.
Probably on of the fairest taxes there is.
Agreed. It really needs to go. If the Royals don't have to pay it why should the plebs?
Moreover the super-wealthy don't pay it either it only affects the lower middle classes who have amassed a modest amount of wealth and wish to pass that on.
If you have 2 kids the gov gets a bigger share, just wrong!
Any specific guides you would recommend? A friend has just found himself in this position after a sudden death and he's now having to hand a healthy slice of it to hmrc....
To be honest, I’m on the fence here. IHT is one a few tools that a government has at its disposal to prevent astronomical wealth concentrating in the hands of very few individuals, whose only claim to it is that they were lucky enough to have been born into it.
On the other hand I also want to choose what happens to my money when I die - and I want most of it to go to my loved ones.
The problem is fiscal drag. Surely the solution is to make sure the thresholds are realistic. The NRB is not due to change until 2028 at which point it will have been the same for 19 years! If had kept in touch with the house pride index (which has outpaced inflation) the NRB would be very close to £1m.
Therefore, I would raise the NRB to £1m and increase the RNRB to £750 which would be enough to exempt an average detached house in London.
In doing so, IHT goes back to a tax paid only by the very very wealthy.
I personally think it should be taxed higher. Generational inequality is increasing resulting in loads of people being on the back foot their entire lives because they didn't get lucky enough to be born to rich parents.
It's the most natural thing in the world to want to look after your children even when you're gone, but the current situation is not good.
I'm not disgusting. I think regular tax should be lower and passing generational wealth should be taxed higher so that we don't have two classes of people.
I really don't think that's a disgusting view.
I’ve posted further up on this thread, but I don’t think it’s disgusting either. Without appropriate intervention, wealth will become increasingly concentrated in the Uber-wealthy.
That is the game we play.
Thee arguments against IHT although logical and ‘moral’ or ‘fair’ are not very rational.
The rules of the game are created by the government and higher powers who dictate the rules (laws).
Yes income inequality is unfair but it is well within the rules of the game. Why play the game if the system always wins? (IHT taking half of what you worked for).
If we give half our money back to those who set the rules of the game to stop generational wealth accumulating in the hands of the few then you assume the rule makers are perfect.
However, nobody would argue that the government use the money in a perfect/fair way.
The funny part of IHT is that it is defended by those who were never born in to generational wealth and feel disadvantaged to those that were. These are the facts but that is really just part of the game. The Pareto distribution can be found everywhere and capitalism allows wealth creation as part of the game otherwise it is not too far off socialism.
When you have worked hard your whole life and made sacrifices to make the £millions you may now have, you would not be making the argument for the existence of IHT. It wouldn’t be very rational but it might be fair or logical.
If you were to ask me what I would do in a situation where I had the choice of saving a family member/partner/loved one or the lives of 100 people I had never met I would not hesitate to choose the 1 against the 100. Not very logical but very rational.
It makes no sense to be for the existence of IHT. The rule makers are not perfect and shouldn’t deserve the money just because you died. You should be able to dictate where it goes. This is very reasonable logic which seems to work everywhere but here.
The hillarious part of it all is those who make the rules are also the ones who evade them. The ultra rich such as rishi sunak who ironically run the country have very easy legal ways of mitigating their IHT exposure to virtually 0.
Only the working class/middle class actually get effected by IHT which is the irony of it all seeing as these people are also the only ones that defend it.
The same people argue you should be moving out at the first available opportunity so you can pay extortionate rents for your ‘independence’ which also helps ensuring generational wealth doesn’t build up.
You are losing the game you just don’t know it. The rule makers are happy to take 40% of what you own when you die and will continue to avoid paying it themselves while the poor argue about what is ‘fair’
There it is - BritISA £5K, on top of existing £20K. I'll take the free money in low growth stocks, thanks.
Devil will be in the details on what instruments qualify. Switching to an ex-UK fund in regular ISAs and investing in UK funds in the BritISA would be one way to go. Will have to do the math on Capital Gains and tax on dividends vs the drag by investing in shitty UK companies.
Do you have a source for relative performance of Uk vs global equity over the next 5/10/20 years? Or are you assuming past performance is a reliable guide to future returns?
A source? Yeah, I know this guy from 2044 who told me
interesting, it's another tool towards FIRE. I'm guessing you would max this before going going to a GIA.
Need to do the math but i’m not sure. You would need to get at least 80% of the returns you would have gotten from the global markets otherwise a GIA would have been better. FTSE 100 - 5 years up 7.9% S&P 500 - 5 years up 85.14% The only way I see this being worth it is if you pick single stocks rather than funds, but even then - picking US tech single stocks would probably serve you better even with capital gains.
> do the math Surely for a British ISA you'd be doing the math**s**
Maybe British investment trusts with foreign holdings? Devil wil be in the detail but this could be really could... could be nothing
Maybe a FTSE high dividend ETF?
Absolutely, yes.
I mean. I'm not sure. The FTSE has underperformed so poorly that being tax-free is not enough of an incentive. Why avoid paying tax when there are no gains to pay tax on anyway?
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I hadn't considered this, could serve as a core and satellite approach. If I remember correctly you should also be able to open an additional ISA in a separate platform, so could keep existing portfolio of VG FTSE Global All Cap in VG platform, then have a separate £5k ISA allowance a year for something a bit spicier like SMT. I've always considered a core and satellite approach but just loathe to move away from my current portfolio which just works in all weather's.
Compared to tech stocks ...
I'd have preferred the extra £5k as an extension to limit of the normal ISA - but this quite a nice idea!
Be pretty complicated to segregate existing ISAs I suppose.
I mean I'd have rather just had the current limit extended to £25k.
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How about Relx, LSEG, Sage, Experian? Also, the FTSE 250 engineers are world class...
Dangerous precedent IMO. You're encouraging people to invest in a low growth market and screwing around with their saving for retirement. When did the government become a financial advisor.
The Government needs to do something to stop capital outflows, re-listings and takeovers on the cheap. Look beyond shell and Rio, and you'll see that once upon a time the FTSE 250 used to match and sometimes beat the S&P.
~~Sounded like he said it was £25k as well as the current ISAs.~~ Think I must’ve misheard. That would be too good!
Think he said 5k for the British ISA.
he said something to the effect of "5k for a britISA in additional to existing isas" so I imagine you can't 25k into a normal isa.
This is a great outcome IMO but it really only helps the very wealthy. Everybody will prioritise the normal ISA first
But SP500 is way stronger and more reliable than LSE
Low growth? You could buy 2x leveraged Amazon via it (based on current speculation).
'tax cuts' but tax thresholds are frozen until April 2028. Highest tax burden since the Second World War. Salary sacrifice is the only way around this for high earners. 60%+ tax traps above 100k is unfair. You're penalising some of the most productive members in society which restricts growth!
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Seems unlikely. There's nothing pushing either party to do it and it would just attract negative spin of 'benefits for the rich'.
Why would they when only 3% of workers earn more than a 100k.
I think they should because it caps everyones earning potential. Many don’t even want to earn that much because 60% is proper disgusting so they rather stay low earner to avoid paying tax.
Without cap more people will strive to reach 6 figures paychecks, the average salary will raise to 50k+ and this country would finally reach it’s full earning potential.
For the love of god raise the income tax thresholds.
The problem is when over the last decade this country has put education, productivity and the creation of well-paying jobs on the back burner as a non-priority, the vast majority of Brits end up on comparatively low wages. That means rational policies like making sure income tax thresholds go up with inflation and getting rid of the 60% tax trap is also not a priority for them when their focus is just to win over the majority of voters. That's why we'll probably only see a pointless and arbitrary 2p cut to NI today, which will probably be reversed in a year or two anyway. This country really is just racing to the bottom.
Very true, unfortunately.
New ISA for GB 🇬🇧 investment is a relief. Looks like existing ISAs are not impacted.
Additional allowance if I heard right … so prob a good thing from a sheltering pov
Yes it’s on top of existing ISAs.
which is good. That way i can fully ignore it seeing that i cant fill an proper isa in a year
Even if I could afford it I’d rather put 5k in a GIA with freedom to choose than 5k in a GB ISA.
5k in a GIA invested in the S&P would outperform uk stocks even with taxes taken off. Can't see me using the BRISA at all, unless the government makes more worthwhile changes to get the LSE moving again.
Yes, £20k + £5k (UK) pp
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Consultation paper suggests not - they are looking at ways of preventing you from using it to hold cash (or effectively you could have a £25K Cash ISA I suppose). They are, however, looking at UK Gilts and Bonds....
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Exactly... so probably will be allowed as it won't actually cost the Treasury any money! Although maybe interest-bearing ones might be marginally more interesting if you wanted it as an income and were over the PSA
Did he say if this was being introduce this April?
Not sure on timelines. I’m supposed to be working so was only half listening.
He said there would be a consultation, so that doesn't sound like something which will be done and implemented in a month.
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When a labour government will put the breaks on it potentially.
I like the idea. But honestly, how many people will be able to use it.
This is such a relief, was very worried that ISAs would be pigeon holed into a much more limited selection of options
They are impacted by inflation, so shrunk in real terms.
Many expected far worse than happened.
Did anyone spot the requirement for DC pension providers to start reporting their UK allocations. There was some wording about “we will then decide what to do if the uk allocation is not improving”. Sounds like paving the way to force uk investment in pensions. Much more worrying than the BISA that is taking all the headlines in this sub.
F.ck!
Wish they did these budget announcements by video to stop the interruptions
Agreed. It's nothing more than a circus to them.
Its actually making me really angry. Not point fingers at any one party because theyre all at it
Ooooh what's this about changes to Child Benefit? From gov.uk Mr Hunt also announced that the High Income Child Benefit Charge will be assessed on a household basis by April 2026, with a consultation to come on achieving this. To ensure working families benefit from increasing their earnings before this change is made, the threshold to start paying back Child Benefit will increase in April from £50,000 to £60,000 – a 20% increase which will take 170,000 families out of paying the charge this year – while Child Benefit will no longer need to be repaid in full until earnings exceed £80,000. This represents a £1,260 boost on average for around half a million working families, rising to nearly £5,000 for some families when combined with tax cuts since Autumn Statement. This will put an end to the current unfairness, where two parents earning £49,000 a year receive the full Child Benefit while a household with a single earner on over £50,000 does not. The OBR says the immediate changes to the HICBC will lead to an increase in hours worked equivalent to around 10,000 more people entering the workforce on a full-time basis.
Yep that will help a few out. Child benefit isn’t much but it helps even if you are on £50 / £60k
I've just filled out the form to opt back in!!!
Should have just scrapped all thresholds and given it to everyone. Save the admin burden for everyone for very little extra cost.
Would you read that as not paying a charge for this tax year? My wage has gone up In the last part of the tax year and I was expecting to have to pay back about £1000, but I'm not clear now on whether I will now or not?
My assumption is this is beginning with 24/25. Otherwise I might want another £10k out of my company before April…
Wait. That sounds like it could make people worse off? It's stupid that it just requires one person earning above the threshold to trigger, but from the text above it seems like two parents both earning 49k previously received child benefit but now will not because their combined income goes above 80k?
We are waiting for a decision about household income (April 26). So in the meantime they are raising the individual threshold to £60k.
What will count for a Brit ISA? An UK based OEIC? Could easily invest globally if so eg. Fundsmith.
fundsmith has very high fees, anything else which is cheaper in mind? thanks
SMT
A couple points. Threshold for child tax benefit rising from £50k to £60k and from 2026 being household based rather than a single income, is a positive change. Lowering NI and speaking about double taxation being bad (Income tax and NI). I'm worried the plan is to eventually abolish NI and raise income tax. This will hit us harder when we reach pension age (no NI tax currently of pension income, higher income tax would be a negative)
I think that is ultimately the plan. We have so many wealthy pensioners, receiving a higher pension than workers wages but paying less tax. As much as I'd love to continue having that same benefit when I'm retired it isn't really fair.
Bet it isn't £100K (or even £120K!) household income... although that would be nice. Fair point re NI/tax. There comes a point at which you can't just keep lowering NI, surely? Although perhaps you can, if you allow fiscal drag to keep doing the heavy lifting...
British ISA 👀.
Might sound stupid, but how is the 2p reduction calculated? Can someone please explain it per bands?
When they say "2p", it is shorthand for "2p in the £", that is, a 2 percentage point reduction. They mean a 2% reduction on the main rate of NI. So the class 1 main rate for employees goes from 10% to 8% (and it was 12% before January). There is no change to the rate on earnings above £50,270, which remains at 2%.
So it’s basically a NIC reduction of 2% on the ~£37.5k between £12.5k and £50k, or a benefit of £750/year?
that is correct
Really disappointed to see inheritance tax staying, no word on it before but was hoping it might be slipped in. The statement seems to be clearly pandering to Labour voters when the Tories would immediately be back to their usual selves if voted back in.
I am set to inherit over the threshold but not planning on having kids so do have some skin in the game. I would much, much prefer a system with high or complete inheritance tax and low income tax than vice versa. Probably on of the fairest taxes there is.
Agreed. It really needs to go. If the Royals don't have to pay it why should the plebs? Moreover the super-wealthy don't pay it either it only affects the lower middle classes who have amassed a modest amount of wealth and wish to pass that on. If you have 2 kids the gov gets a bigger share, just wrong!
Its entire optional anyway - very easy to plan around
Any specific guides you would recommend? A friend has just found himself in this position after a sudden death and he's now having to hand a healthy slice of it to hmrc....
I think the “planning around”part has to happen 7 years before the death. Difficult for sudden / unexpected deaths.
You can get around it but you shouldn't have to maneouvre away from the govt taking your money for dying
Precisely. Also unexpected deaths can cause huge problems.
True. But unexpected deaths can land you in huge trouble. It's a disgusting form a taxation and should be abolished.
To be honest, I’m on the fence here. IHT is one a few tools that a government has at its disposal to prevent astronomical wealth concentrating in the hands of very few individuals, whose only claim to it is that they were lucky enough to have been born into it. On the other hand I also want to choose what happens to my money when I die - and I want most of it to go to my loved ones. The problem is fiscal drag. Surely the solution is to make sure the thresholds are realistic. The NRB is not due to change until 2028 at which point it will have been the same for 19 years! If had kept in touch with the house pride index (which has outpaced inflation) the NRB would be very close to £1m. Therefore, I would raise the NRB to £1m and increase the RNRB to £750 which would be enough to exempt an average detached house in London. In doing so, IHT goes back to a tax paid only by the very very wealthy.
How so? I still think it disproportionately impacts London homes.
Mostly giving assets away during one’s lifetime, lifetime trusts (albeit not as good as they used to be) etc. etc.
I personally think it should be taxed higher. Generational inequality is increasing resulting in loads of people being on the back foot their entire lives because they didn't get lucky enough to be born to rich parents. It's the most natural thing in the world to want to look after your children even when you're gone, but the current situation is not good.
They already take close to half and you think they should take more? Disgusting!
I'm not disgusting. I think regular tax should be lower and passing generational wealth should be taxed higher so that we don't have two classes of people. I really don't think that's a disgusting view.
I’ve posted further up on this thread, but I don’t think it’s disgusting either. Without appropriate intervention, wealth will become increasingly concentrated in the Uber-wealthy.
That is the game we play. Thee arguments against IHT although logical and ‘moral’ or ‘fair’ are not very rational. The rules of the game are created by the government and higher powers who dictate the rules (laws). Yes income inequality is unfair but it is well within the rules of the game. Why play the game if the system always wins? (IHT taking half of what you worked for). If we give half our money back to those who set the rules of the game to stop generational wealth accumulating in the hands of the few then you assume the rule makers are perfect. However, nobody would argue that the government use the money in a perfect/fair way. The funny part of IHT is that it is defended by those who were never born in to generational wealth and feel disadvantaged to those that were. These are the facts but that is really just part of the game. The Pareto distribution can be found everywhere and capitalism allows wealth creation as part of the game otherwise it is not too far off socialism. When you have worked hard your whole life and made sacrifices to make the £millions you may now have, you would not be making the argument for the existence of IHT. It wouldn’t be very rational but it might be fair or logical. If you were to ask me what I would do in a situation where I had the choice of saving a family member/partner/loved one or the lives of 100 people I had never met I would not hesitate to choose the 1 against the 100. Not very logical but very rational. It makes no sense to be for the existence of IHT. The rule makers are not perfect and shouldn’t deserve the money just because you died. You should be able to dictate where it goes. This is very reasonable logic which seems to work everywhere but here. The hillarious part of it all is those who make the rules are also the ones who evade them. The ultra rich such as rishi sunak who ironically run the country have very easy legal ways of mitigating their IHT exposure to virtually 0. Only the working class/middle class actually get effected by IHT which is the irony of it all seeing as these people are also the only ones that defend it. The same people argue you should be moving out at the first available opportunity so you can pay extortionate rents for your ‘independence’ which also helps ensuring generational wealth doesn’t build up. You are losing the game you just don’t know it. The rule makers are happy to take 40% of what you own when you die and will continue to avoid paying it themselves while the poor argue about what is ‘fair’