Bonus ISAs: a Policy Exchange policy bite

Document type
Paper
Author(s)
Hughes, Steve
Publisher
Policy Exchange
Date of publication
16 January 2015
Subject(s)
Poverty Alleviation Welfare Benefits and Financial Inclusion
Collection
Social welfare
Material type
Reports

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People would be given more flexibility to build up their tax-free savings pots during the course of a lifetime under Policy Exchange proposals to introduce a Bonus ISA (BISA). The BISA would be offered to anybody who is unable to use their full annual tax-free savings allowance (currently set at £15,000). People would be given the power to roll over any unused portions of their existing ISA allowances into their Bonus ISA account. There would be a cap – initially £10,000 – on the total amount that customers could roll over into their BISA. This would allow the Exchequer to control the cost of introducing the new scheme.

People who experienced a one off financial windfall such as an inheritance, house sale or redundancy payment would benefit from being able to save a much greater amount into a tax-free account within a single year. Alternatively they could utilise the BISA over a number of years until the cap is reached.

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