UK Chancellor unveils Great British ISA following industry calls

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UK Chancellor unveils Great British ISA following industry calls

ISA reform sees £5,000 additional allowance

Chancellor of the exchequer Jeremy Hunt has confirmed the introduction of the widely predicted Great British ISA (GB ISA).

As part of an array of measures aimed at bolstering retail investor participation in capital markets, the GB ISA will "encourage more people to invest in UK assets", Hunt said in the Spring Budget today (6 March).

The GB ISA will give investors an additional annual allowance of £5,000 a year to invest solely in UK equities.

The threshold will be in addition to the current annual ISA allowance of £20,000.

The move, Hunt said, came after more than 200 financial services and City executives urged him to unveil ISA reforms in his Budget to revive UK capital markets.

Personal Investment Management & Financial Advice Association head of public affairs Simon Harrington said: "While we strongly believe in the principle that retail investors can and should be encouraged to play a positive role in supporting UK businesses with private capital, it is not immediately clear to us that the British ISA represents anything more than a policy announcement in search of a headline.

"We see very little appetite to offer such a wrapper while the operational burden, which this would place on firms suggests that even if appetite were there it seems unlikely that firms would want to offer it.

"If the government is really committed to reviving retail investment in UK PLC we would suggest simpler measures like a reduction or abolition of Stamp Duty on share purchases rather than the introduction of yet another ISA into the market."

M&G Wealth tax and technical expert team head Les Cameron added: "The introduction of the British ISA increases choice for savers and importantly increases the annual ISA limit by £5,000. Arguably, however ISA investing is becoming increasingly complex with the number of variants now available and simplification here would be welcomed.

"The majority of ISA savers subscribe less than £15,000 so this increase is likely to be most attractive to those in the £100,000 plus income bracket who are most likely to maximum-fund their ISAs.

"For those looking to invest solely in the UK, the new British ISA could prove a valuable addition to their investment portfolio.

"For those looking for further diversification, the UK ISA could become the wrapper of choice for UK investments, alongside other tax wrappers being used to invest in other regions."