Falling Apples, posh trains and confusing ISAs

This week, we’ve seen much chatter about the monarchy’s tax bills, a market slump on Tuesday and annoying new changes announced to ISAs.

I was most struck by the cost of the Royal Train. Here’s an example – a single trip to Dartmouth cost £37,666. Cheaper than Lancaster, which clocked in at £48,460. I know First Great Western aren’t that good, but that’s a hard value argument to make. This train is being taken out of service in 2027. Might I suggest that, if the Royal Family were to fund upgraded air con on trains with the savings from the Royal Choo-Choo, we would all become fervent monarchists?

Meanwhile, the Treasury has confirmed that although Cash ISAs will likely outlast the Chancellor, they will look a bit different from next April.

Under 65? You will still get an ISA limit of £20,000 each year, but you can only allocate £12,000 of this sum to Cash ISAs. You can put the full £20,000 into a Stocks & Shares one. If you like a combo, you can have both up to a combined maximum total of £20,000 (so for cash-lovers the maximum would be £12,000 in a cash one and the remaining £8,000 in a Shares one).

Under 65s will also NOT be able to transfer money from Shares ISAs to Cash ISAs. But you can transfer a Cash one to a Shares one.

Over 65? No change for you. It’s £20,000 maximum into either Cash or Shares or a combo of both.

Only being eligible for a £12,000 Cash ISA will become a covetable descriptor on Tinder, similar to having a defined benefit pension. Younger readers take my word for it. These are more valuable than a GSOH.

There are more cash rules. From April next year, anyone under 65 thinking they’re really smart by using the Stocks & Shares ISA wrapper to house a money market fund (cash-like stuff) – and so getting the full £20,000 in a tax-free ISA – NOT SO FAST! Rachel has spotted naughty you. So, you can’t put 100% of your money in the Stocks & Shares ISA into a Money Market fund.

From what I can tell, however, you could put 99% into one. So, lots of head-scratching complexity for seemingly little gain.

Regardless of age, you will also be charged 22% of any interest you make on cash held in the cash account of a Shares ISA. Clear as mud, isn’t it!?

Changes to Lifetime ISAs as well

Lifetime ISAs? Sayonara to these. They join Help to Buys on the scrapheap BUT don’t panic. If you have one, it will allegedly keep rolling on as before, even if and when its replacement starts. And you will be able to use your LISA and money in any new replacement product for the same flat purchase. I would not let these changes deter you or your kids from continuing to set up or save into a Lifetime ISA this year.

From April, we’ll have new First Time Buyer ISAs. Which sounds lovely, although, oops, no one knows the rules yet. Other than they will pay the bonus on exchange and it will be eligible for everyone over 18, not just the under 40s. And there will be no early withdrawal charge. We don’t yet know the contribution levels from the Government, which are currently the nice 25% bonus for savers, up to a maximum bonus of £1,000 each year if you save £4,000.

Neither do we know if the maximum cap of £450,000 for the property will still apply. Which sadly impacts people in London most, who get a small dishwasher in Zone One with a side cupboard for that.

There is a consultation on at the moment, and we’ll bring you more on the final rules when we know more. The Treasury docs suggest that this will be at a ‘future fiscal event’, which means it will be in the Budget unless things screw up, in which case they can invent a ‘future fiscal event’ to announce it at.

I might adopt this for any question I get which requires a timeframe in the answer. “I will do it at a future fiscal event”.

Bumpy markets and your IPO plans

Away from Blighty, markets jumped around A LOT this week. Tuesday was a grim day and my secret naughty volatility trade, which is Korea’s Kospi (effectively a technology and chip-maker index), fell by 10% in a day. Hardcore. It was up around 6% over the next two sessions and has fallen again in the last day as part of a broader tech stock sell-off. The Nasdaq has had its first four-day losing streak since February with some big-name casualties. Apple fell by 6% on Thursday and Google parent Alphabet fell by 5% on Monday. It’s jittery out there.

IPOs and AI giants are very much in people’s thoughts. Last week, we asked what you thought about SpaceX IPO and the upcoming Anthropic and OpenAI launches. Thanks to all of you who shared your thoughts – I read every comment and enjoyed them!

As a summary, you’re much more interested in Anthropic – reportedly for product (you guys like Claude), the CEO and the perceived better ethics. There is a real anti-Musk sentiment out there – one reader thought that SpaceX was “fluff, based on the attraction of a charlatan, a modern-day P.T. Barnum.”Others thought Musk was unlikable but a “genius”.

I like the lady who told me that there’s an IPO head-to-head competition brewing with her hubby – she’s Team Anthropic and he’s Team Open AI. Hubby might have to wait – this week we’ve heard reports that the OpenAI Board have the heebie-jeebies after SpaceX’s slide and are considering deferring to 2027. You can read our summary of what Boring Money readers are planning about future IPOs – interesting to see where the retail momentum and votes might be.

Anyone looking for diversification beyond the tech sector might be interested in our latest sector update on healthcare. By way of example, my Polar Capital Healthcare Trust felt like a bad idea last year as tech stocks soared around it, but in the last month, it’s up nearly 12% and has redeemed itself in my eyes. I’m not plugging any one product, but it is a good reminder of the power of diversification.

Have a great weekend, everyone. I will be happily bobbing around in and on the Solent, either like a mermaid or a large seal, depending on who you ask :0)

Holly