Suggestion to change the UK ISA rules

📊 Investing
1

Is anyone up for trying to lobby the UK government to change the ISA rules. I think we need to get 100k votes for it to be discussed.

We would need to write a sort of white paper first.

Issue

Personally in this day and age, only being able to invest new money into one of each type of ISA on an annual basis, and the guidelines for 6 weeks to transfer cash and 12 weeks for stocks between ISA providers is too restrictive.

It is not good for the consumer, nor does it help encourage competition either.

Say I want to invest my 20k allowance across Mutual funds, ETFs and stocks. I can’t do that here on 212 as no mutual funds. I also have to use a more expensive broker that covers all 3. 212 or other brokers lose out from that business and we incur higher fees.

Proposal

Allow users to invest in multiple ISAs of any type in each tax year, up to the limit to help promote tax efficiency, competition and lower fees for consumers.

How could they work in practice?
The UK government already have a unique ID for each person in the U.K. - National Insurance Number.

I request a deposit with broker A of £2000. Broker A checks my NIN record and reserves £2k of my annual ISA allowance, and grants clearance to accept my funds. I deposit £2k and invest in stocks. Broker A tells my NIN record I have deposited £2k and my remaining allowance is £18k.

I then request to deposit £5k in a P2P ISA, £5k in a cash ISA, £5k in Broker A, and 5k in broker B. The first 3 are given clearance, and the last one is a partial clearance of £3k as that’s all I have left. I realise I forgot I had already invested 2k this year but still want to invest 5k in broker B. I only deposit 3k into my cash ISA, and cancel out the remaining £2k of clearance. I then request an extra £2k deposit in broker B and get clearance. I now invest 5k in my Cash IsA, 5k in broker A and 5k in Broker B.

I am now fully invested for the year.

Finally, I decide I hold too much cash. I withdraw 10k from my P2P ISA, and that temporarily adds an extra 10k to my current year deposit allowance. I then request to deposit £10k to broker A, get clearance and then deposit. Job done.

Just some examples, but it would allow greater flexibility to the user(all companies supporting this scheme would be able to provide a flexible ISA), along with help promote more competition hopefully as well.

Thoughts?

  • Is it a good idea?
  • Would you change anything?
  • Do you think we could get the 10k/100k votes needed?
4 Likes
2

It would be nice to have a central ISA account listed with the .Gov or your chosen banking institution which you can then give Access / API access to your chosen brokers and they all register your investments inside that central ISA account holding.

Just an idea? overall from your original post I don’t see the .Gov helping in this regard, if anything I can see them scaling back how much tax free ISA money we’re allowed to have.

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3

I would say 95% of people would find all they need to invest in available on T212. (or any one broker) only a few would not find everything they need (ie: day traders which is not much of the population), so IMO getting 100k names would be difficult to solve a problem that only faces a small percentage.

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4

Thats where I’m in a different camp. 212 do not currently have stocks like MWE or TBLD, nor do they have mutual funds.

I like choice.

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5

The whole have only one type of ISA per year is outdated imo. Having the potential for multiple brokers and still buying within a tax wrap makes sense.

It’s like if you were forced to only have one bank account at a time.

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6

Especially in times where the Fintechs are disrupting the traditional business model of cross-selling several products and services in the same company.

Most Fintechs have niche or specialized business models, to have economies of scale.

E.g. broker A for stocks, broker B for bonds, broker C for robo-adivising or ETFs, broker D for mutual funds, broker E for options, broker F for P2P/P2B lending/Invoice Financing, etc.

2 Likes
7

They’ll never go for this… ever… :expressionless:

And who’d be responsible to keep this ledger for NiNo → ISA allocation. Government? Third party? “Brokers Union?”

I don’t think companies want greater flexibility or competition, so this has to be forced by legislation. Even the simplest things that you’d think should be no brainer in this day and age are not supported by brokers (i.e in specie transfers) simply because this flexibility is not on agenda ;(

8

Its just an idea to modernise and old model. It would give anyone the option to cash out/in much quicker, removing the need to wait 6-12 weeks. It may not be perfect and can be tweaked but as an idea should be better than what it currently is.

9

Don’t get me wrong, I’m not objecting to the idea, just in reality they’ll never go for it, unless hard forced by law.

1 Like
10

Hence raising it with Parliament to change the flexibility in the model. If we get that, then its up to brokers to implement changes to the guidelines/law.

11

I’d also like to see the 20k limit raised, £1,666.66 per month of tax free investment is way too low, I’m sure Rishi wouldn’t mind raising this outdated threshold to at least 30k, as cost of living rises, so should our tax free investment allowance.

12

I would love to see the LISA limits increased. Oh and while they are at it the personal savings allowance. £500 per year for higher rate earners is crippling.

13

I could see it decrease before increase in the current environment

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