As part of the Government’s annual Spring Budget, Chancellor Jeremy Hunt has introduced much anticipated Individual Savings Account (ISA) reform.
In a bid to “encourage more people to invest in UK assets,” the Chancellor introduced a ‘British ISA’, which will allow savers an additional £5,000 investment.
According to Hunt, the ISA will allow borrowers to invest in UK equity with all the tax advantages of other ISAs.
Reaction:
Mike Ambery, retirement savings sirector at Standard Life, part of Phoenix Group:
“ISAs represent a significant pool of savings and the Chancellor is hoping he can encourage people to buy British.
“The big question is whether today’s incentive will be enough to encourage people to invest at home.
“Last year around 12 million people saved nearly £70bn into ISAs and the total value of funds stood at around £700bn.
“Rising interest rates have made the returns on cash ISAs much more attractive and among those who are willing to invest, there are many markets to choose from with the US in particular having performed strongly in recent years.
“One factor working in the Chancellor’s favour is the growing number of people with cash savings outside of an ISA many of who will now be paying tax on the interest.
“The additional £5,000 allowance might be enough to tempt some of them to invest and the UK is home to many excellent companies.
“As with the wider ‘Mansion House’ scheme, the emphasis on UK growth has the potential to benefit us all but it’s crucial that good outcomes for savers remain at the centre of any investment decisions irrespective of the investment type selected.
“As ever, maintaining a diversified portfolio of savings and investments is a sensible way to work towards both short and longer-term financial goals.”
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
”ISAs are a popular product which helps get people investing for the first time, its vital that we keep this framework simple.
“We welcome the launch of the consultation which considers how to revitalise UK listings with a British ISA.
“We have heard the calls around improving liquidity in London markets, especially at the small and mid-cap end. Here retail investors have an important role to play.
“HL’s clients are already enthusiastic UK investors with 83% of shares held in UK listings. With over 1000 UK equities available on our platform there is plenty of choice.
“In our response to the consultation, we will explore how best to support these investments.
“Beyond this it’s clear that we need measures to encourage more people with excess cash savings to invest. Here there are other levers to pull.
“The review of the advice boundary allowing for more personalised support for consumers has the potential to have a significant impact.
“Helping the 92% who do not receive investment advice, make their first steps into investing.”
