Plans for UK ISA to boost investment in London-listed shares ‘scrapped by government’ in apparent U-turn
Plans for a British Isa have reportedly been scrapped by the government, despite saying just months ago that it would not do so.
Investors would receive £5,000, on top of their existing £20,000 tax-free limit, to invest in London-listed shares and boost UK businesses.
But now the government is reportedly planning to drop the bill in a U-turn, fearing it would “complicate” the market.
The plans were set out by the previous Conservative government during the Spring Budget earlier this year
Labour said during the campaign that it had no plans to scrap the UK’s ISA Act.
The plans were set out by the previous Conservative government during the Spring Budget earlier this year.
Labour said during the campaign that it had no plans to scrap the UK Isa. But a government source told the Financial Times yesterday: ‘We have no intention of making the Isa landscape any more complicated.’
Investment chiefs warned the plans would throw the already complex Isa system into disarray and could deter investors from taking advantage of tax breaks.
Shaun Moore, tax and financial planning expert at Quilter, said: ‘Labour’s scrapping of plans for a UK Isa is a sensible move… If the UK Isa had actually been launched it would have only muddied the waters.
‘The UK Isa was fraught with problems and the proposals risked confusing consumers or creating bad outcomes. For example, restricting the ability to switch from a UK Isa to another Isa might not be fully understood at the time of opening. In addition, the investment universe of a UK Isa would obviously be limited.’
Meanwhile, Michael Summersgill, CEO of investment platform AJ Bell, said: ‘The UK Isa was a political gimmick. The new government will hopefully take a more sensible approach to Isa reform, focused on simplification for the benefit of consumers.’
Ahead of the general election, Labour promised it had no plans to ditch the British Isa.
Many city leaders, however, believe more needs to be done to encourage investment in British companies.
Summersgill said changing the exemption to £25,000 would boost investment. Currently, savers can invest a maximum of £20,000 a year in Isa accounts.
Dan Moczulski, UK managing director of Etoro, said: ‘I think there is unanimous consensus that more needs to be done to stimulate investment in the UK, revitalise our capital markets and get more people investing and saving. The UK is a leader in financial services, but when it comes to the number of households investing in capital markets, we lag miles behind the US.’
A Treasury spokesman said: “No decisions have been made yet. The government will provide more information in due course.”
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