British ISA scrapped

hallmark

The roll-out of a British ISA has been scrapped by the new government despite Labour insisting it had “no plans” to ditch the scheme in the run up to the election.

https://www.cityam.com/u-turn-british-isa-dropped-by-labour-despite-prior-pledges/

ColdIron

... according to a report in the Financial Times.

https://citywire.com/funds-insider/news/a-political-gimmick-uk-isa-scrapped/a2449359

I can see their point but I would have availed myself of the extra £5,000 anyway

The UK government has dropped plans for a “British Isa” that would have channelled savers’ cash into London-listed stocks over concerns that it would “complicate” the investment market for individuals.

Two people close to the process said Labour had abandoned plans to push ahead with the new Individual Savings Account product drawn up by the last Conservative government, which would have allowed an extra £5,000 for UK-listed equities only.

“We are not planning to complicate the Isa landscape even further,” one government figure told the Financial Times. The Treasury declined to comment.

The move marks a U-turn from before the general election, when a Labour spokesperson said the party had “no plans to drop the British Isa”.

The new product was drawn up by the previous government this year in an attempt to encourage savers to invest and help boost UK stocks, which have suffered from investors selling and opting for global shares in recent years.

The British Isa would have provided an additional tax-free amount for UK-listed equities, in addition to the current £20,000 annual allowance. Jeremy Hunt, then Tory chancellor, said in his March Budget that it would ensure savers “benefit from the growth of the most promising UK businesses”.

The Labour government’s decision comes after investment sites such as Hargreaves Lansdown and AJ Bell warned the Treasury that another Isa product would make investing more complicated for individuals and could even deter them from using the tax-free wrappers.

Cash Isas allow people to save money without incurring income tax on interest, while stocks and shares Isas shelter investors from income tax on dividends and capital gains tax when selling shares. There are several different versions, including the Innovative Isa and Junior Isas.

Michael Summersgill, chief executive of AJ Bell, welcomed the decision to drop the plans, saying: “The UK Isa was a political gimmick that was doomed to fail in its objective of boosting investment in UK plc.

“The new government deserves credit for consigning this ill-conceived idea to the policy dustbin and will hopefully now take a more pragmatic, long-term approach to Isa reform focused on radical simplification,” he added.

Richard Wilson, chief executive of Interactive Investor, said the investment site was “glad to see the back of the British Isa discussion”.

“We were crystal clear with the previous government that the British Isa was a mistake [and] that it would not work,” he added.

UK equities have come under pressure in recent years, as pension funds have slashed their exposure to domestic stocks and shifted investments into global equities, in search of higher returns.

Retail investors have pulled out about £54bn since 2016, according to recent data from the Investment Association, a trade body.

Although the government has dropped plans for a British Isa, chancellor Rachel Reeves has set out a blueprint that could support UK equities by funnelling more defined contribution pension money into a wider range of UK assets.

But investment sites think the government needs to go further to simplify the Isa market to encourage savers to use the tax-free wrappers for investment.

Dan Olley, chief executive of Hargreaves Lansdown, the UK’s biggest consumer investment site, said this year that it was “essential that we keep things as simple as possible”.

Summersgill previously said the government, which sets the Isa rules, should allow for one Isa product instead of several different versions, as “too much choice can lead to people feeling overwhelmed”.

This week HM Revenue & Customs, the UK tax agency, dropped a ban on investors holding portions of shares in tax-free Isas, in a move that should help channel more money into stocks.

clive0510

Draw your own conclusions.

Swipe

I guess that's saved us all from performance disappointment 

jimjames

Investment industry seem to be pleased

“The UK ISA was a political gimmick that was doomed to fail in its objective of boosting investment in UK Plc,” said Michael Summersgill, chief executive at AJ Bell.

Kim_13

I didn’t think it was a very good idea, but I am of the opinion that you need to have a better idea to replace it with first. Not just a means of encouraging investment into the UK, but with anything.

masonic

I would have used it, but it wouldn't have resulted in me investing any more in UK companies than I already do. I certainly wasn't expecting to see any sort of increase to the ISA allowance given the current mood music.

dunstonh

masonic said:

I would have used it, but it wouldn't have resulted in me investing any more in UK companies than I already do. I certainly wasn't expecting to see any sort of increase to the ISA allowance given the current mood music.

I would have moved the UK element to the British ISA and kept the global in the main ISA.   The ratios wouldn't have changed though.  It would have just been an extra £5k ISA allowance to utilise each year.

I had a gut feeling that it would be like the LISA and hardly anyone offering it.   The admin for platforms to identify each and every fund that would qualify for it would have been awful.   An API from the fund houses may have come in time but it would be a lot of coding for little benefit.

masonic

dunstonh said:

masonic said:

I would have used it, but it wouldn't have resulted in me investing any more in UK companies than I already do. I certainly wasn't expecting to see any sort of increase to the ISA allowance given the current mood music.

I would have moved the UK element to the British ISA and kept the global in the main ISA.   The ratios wouldn't have changed though.  It would have just been an extra £5k ISA allowance to utilise each year.

Yes, exactly my thinking too. But alas, it wasn't to be.

dunstonh said:
I had a gut feeling that it would be like the LISA and hardly anyone offering it.   The admin for platforms to identify each and every fund that would qualify for it would have been awful.   An API from the fund houses may have come in time but it would be a lot of coding for little benefit.

Maybe LISAs will be next for the chop...

ColdIron

masonic said:

I would have used it, but it wouldn't have resulted in me investing any more in UK companies than I already do.

I would have used it as well, why wouldn't you? However, like most, I would have simply reallocated any existing UK investments and created space for non-UK elsewhere

I certainly wasn't expecting to see any sort of increase to the ISA allowance given the current mood music.

Indeed

Although the government has dropped plans for a British Isa, chancellor Rachel Reeves has set out a blueprint that could support UK equities by funnelling more defined contribution pension money into a wider range of UK assets.

Funnelling. Maybe it's just me but there's something I don't like about that. Would those UK assets involve the Department for Energy Security and Net Zero?

This week HM Revenue & Customs, the UK tax agency, dropped a ban on investors holding portions of shares in tax-free Isas, in a move that should help channel more money into stocks.

This may be welcome for some but in my view isn't consistent with simplifying the investment market for individuals.

Just a view

Hoenir

solidpro said:

jimjames said:

Investment industry seem to be pleased

“The UK ISA was a political gimmick that was doomed to fail in its objective of boosting investment in UK Plc,” said Michael Summersgill, chief executive at AJ Bell.

I agree. A total waste of time. About as intelligent as the Bibby Stockholm which has also been canned.

Great British ISA and great british everything else written on a fag packet is built in sand.

Incentivise business, reduce trade friction, nationalise vital government infrastructure. It really isn't rocket science. Unfortunately the opposite of the last 15 years.

Also really glad they're no longer constantly giving nurses, teachers and train drivers a year on year pay cut.

Maybe increasing ISAs to £25k a year also isn't in the manifesto - does that mean they can't do it?

When a recently appointed Minister publicly says that the cancellation of the WFA saved a run on the pound. You have to question the economic literacy of those now in power. Confidence from the business world will seep away rapidly.