Julian Knight: Savers should not ignore tax-free equities

Allow people to put all their individual savings account allowance into cash, says the Nationwide. At present people can put a maximum of 50 per cent of their allowance into cash; the rest has to go into equities or remain unused. Now, putting aside Nationwide's obvious self interest here, as one of the UK's biggest cash ISA providers, I have some sympathy for this idea.

Savers have been systematically devastated over the past five years by falsely low interest rates. There has been a transfer of money from savers to debtors on an unprecedented scale. Against such a backdrop any scrap of comfort is welcome. But then again isn't £5,340 a year in ISAs enough? Not to mention the tax-free savings bonds from National Savings which come to market on a regular basis allowing up to £30,000 to be sheltered. What's more, those who shouldn't pay tax, because they earn less than the personal allowance threshold, can simply sign a docket at their bank or building society in order to avoid it.

The ISA allowance itself is guaranteed by the current Government to go up with inflation. In short there are lots of opportunities for people to shield their savings from tax. What's more, should people have such a large amount in cash? Even with the tax break many accounts don't come anywhere near keeping pace with inflation, so unless it is your rainy day fund or you are nearing a point in your life when you need the money intact you'd be best looking to get your money working harder for you, which usually means bond funds or equities.

Of course, people wouldn't be forced into cash rather than equities but the preferential treatment given to equities in the ISA system at least points people in potentially the right direction. I'd keep things as they are.

100-year bond suggests false pride

A generation ago UK government debt was firmly in the second division as far as many international investors were concerned. Perceived economic weakness and the UK's precarious status as a dwindling oil exporter meant our debt was a poor relation of Germany and the US.

Nowadays, despite the fact that the Government is issuing debt like confetti, it seems we can't do any wrong; now the Chancellor wants to pilot 100-year and even perpetual government debt (in the latter case the capital never gets repaid). And it seems with insurers and other financial institutions desperate for so-called safe investments to satisfy stricter solvency requirements there may be the odd taker.

But, really, 100-year bonds at historically low rates of interest, when you factor inflation (as you must) into the equation look like a nailed-on means of losing money, a rank bad investment along with bonds issued in the world wars. This seems to be more about the Chancellor breast-beating about his stewardship of the economy and the genuine confidence of investors. What's the phrase about pride coming before a fall?

No dice, Balls

The battle over potential reform of pensions tax relief continues to rage. Most recently, it was shadow Chancellor Ed Balls who threw his not inconsiderable weight behind relief reforms.

Despite having had a decade at the Treasury to push the case for reform Mr Balls is suddenly a convert. He wants to cut relief available to those earning £150,000 from 50 per cent to 26 per cent. Apparently this will raise enough money for the Government to be able to row back on its cuts to tax credits. Bash the rich and back so-called hard-working families – perfect Mr Balls-style political opportunism. You have to admire his chutzpah.

Of course, Mr Balls's figures don't add up, but that has never mattered to him as long as his career is edged forward; he learned a lot at the feet of Gordon Brown. However, I agree with cutting the relief in the Budget– for 40 per cent taxpayers too – but not to fund tax credits, which are also dogged by fraud and inaccuracies.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
scotland decidesIs a huge gamble on oil keeping the First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
PROMOTED VIDEO
Arts and Entertainment
Lionel Messi in action for Barcelona
filmSo what makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
News
i100
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Sport
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant Birmingham

    £18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Recruitment Consultant - Soho - IT, Pharma, Public Sector

    £20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

    Sales Executive

    £20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week