Why is there a limit on ISA annual contributions?

[Impret-Sir]

I mean, the government are always telling us to save more, but then they put a cap on how much you can put into an ISA each year. The two seem to be contradictory. Is it because they want to force you to save in something like a building society account, in other words something that they can take tax on?

[Loosehead]

It's to stop rich people saving zillions tax free. The limit is very low though, it should be more like 15k a year for cash mini isa's and 20k for shares isa's etc.

[Oneeyedvic]

Of course the government don't want you to save - the only reason we are not in recession is because we have an economy that is being buoyed by high street spending.

[twiglet4frog]

cant u have more than one ISA though??

[Loosehead]

yes but to a max total per year.

[Dom Tuk]

The limit on a mini isa per person per year is �3000 and on the maxi ISA is �7000 but that is linked to te share index which is doing poorly these days. So the amount you will gain on a mini isa from not paying taxes on the interest is equal to foregoing about a pint of beer a month. Not worth the bother.

You spend he gains and remains in power.

[Didwot]

You should be saving about �30 a year in tax relief if a lower rate tax payer on each �3000, but after ten years of mini ISAs you would be saving ten times tha and moret!
The reason for limits is that it would be contrary to common sense to allow an infinite investment to be tax free. No one would pay any tax on any investments. So a limit has to be set, and the issue is that the limit is absurdly low.

[stevie21]

When did the government last tell us to save more? Nobody told me.

[tubeway]

It would be nice if they allowed me to keep enough of what I earn to allow me to save something