Steven Cameron, Pensions Director at Aegon said: “The new British ISA will appeal to those who currently max out their ISA limits, providing scope for an extra £5k tax-free saving. It will also offer transparency, appealing to those who wish to be certain their investment is staying within the UK. It will be important the forthcoming consultation creates an unambiguous definition of what qualifies as a UK investment within a ‘British ISA’.
“Investors should however be mindful about putting all their ‘eggs in one basket’. Diversifying across different asset types and geographical locations can be an important way of managing investment risk, something which should be emphasised to potential investors.
“The creation of the British ISA comes alongside a push to get UK defined contribution pension schemes to invest more in the UK, including in private assets. The Chancellor clearly wants to take every opportunity to use all types of savings and investments to boost UK economic growth.”
Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group said: “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.”
Simon Harrington, Head of Public Affairs at PIMFA, comments: “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”.
SPRING BUDGET 2024
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