The government is reportedly set to scrap plans for a British ISA.
According to the Financial Times, the Labour government will not follow through on the proposal drawn up by the previous government.
The policy would have allowed savers to invest an additional £5,000 tax-free in UK equities, on top of the usual £20,000 ISA allowance.
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Investment platform AJ Bell has been vocal in its opposition to the UK ISA, instead calling on the government to introduce a ‘One ISA’ product by merging together cash and stocks and shares wrappers.
Reacting to reports that the proposal had been scrapped, CEO Michael Summersgill labelled the scheme a “political gimmick” that was doomed to fail in its objective to boost investment in UK plc.
“The new government deserves huge credit for consigning this ill-conceived idea to the policy dustbin and will hopefully now take a more sensible, long-term approach to ISA reform than their predecessors, focused on simplification for the benefit of consumers.”
Shaun Moore, tax and financial planning expert at Quilter said the decision is a sensible move.
“The ISA is a simple idea, a tax efficient place to grow your wealth, however, with various additions over the years it has now become a confusing area of personal finance. If the British ISA did see the light of day, it would have further muddied the water.
“The British ISA was rife with issues and the proposals ran the risk of consumer confusion or poor outcomes. For example, limiting the ability to transfer out of a British ISA to a different ISA may not be fully understood at the time of opening. Furthermore, the investment universe of a British ISA would be naturally limited.
“The reality is, the UK has a cash savings problem and too much money is sat in low yielding cash ISAs, doing very little to help them or the economy. Finding ways to get that money invested for the long-term would be far more beneficial to the UK as a whole without the need for the creation of an extra allowance.
“The more people we get investing, both in the UK and more generally, the more the economy will naturally come to benefit.”
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