Help to Buy should lose ISA status because it mostly benefits high earners
The main story in The Independent today (Tuesday), “Government’s Help to Buy housing scheme increasingly benefiting higher earners” calls for the Help to Buy housing scheme to be scrapped due to the fact it mostly benefits higher earners.
Last Friday (25 May 2018), the Office of Tax Simplification published a report on the taxation of savings income. Five pages of this 47-page report relate to ISAs and there is criticism of the way in which the Help to Buy Scheme operates.
The report states:
“…if you take out a Help to Buy ISA you can’t take out a normal cash ISA (but you can start a Lifetime ISA). This is not always understood by investors, particularly where the overall limit has not been reached.”
The OTS also notes that the Gov.uk guidance page causes further confusion as it makes no reference to the existence of the Help to Buy ISA.
In relation to the future of the Help to Buy Scheme, the OTS report states:
“It appears that the Help to Buy ISA is being phased out in favour of the Lifetime ISA although there is no clear statement on this point on the relevant pages of gov.uk.”
The Help to Buy scheme has been extended in the past and may be so again.
In response to these developments, Association of Accounting Technicians (AAT) has reiterated its calls for Help to Buy to lose its ISA status as soon as possible.
Phil Hall, AAT Head of Public Affairs & Public Policy, said:
“The AAT ISA Working Group called for the Help to Buy ISA to lose its ISA status in March this year when it published its “Time for Change” report.
“Nothing that has happened since then that would make us change that view, in fact, there is much to suggest the arguments for removing ISA status from Help to Buy have got stronger.
“Help to Buy has never been an ISA in the traditional sense and losing the name will make no difference to its operation – but a real difference to public understanding of what an ISA actually is.”
The AAT ISA Working Group consisting of MPs from the SNP, Labour and Conservative parties, personal finance journalists, savings industry professionals and accountancy sector representatives, published a comprehensive review of the ISA landscape in March 2018. The report can be read in full here: Time for Change
Kindly shared by the Association of Accounting Technicians (AAT)