Proactive Investors - Wealth platforms were punching the air last night as the Labour Government did a U-turn and scrapped the British ISA proposed by the previous administration.
From the outset, the idea was heavily criticised by platforms such as AJ Bell (LON:AJBA) and Hargreaves Lansdown (LON:HRGV) for the administrative cost it would cause them, and they have found a receptive ear in Chancellor Rachel Reeves.
That is in spite of Labour saying it had no plans to ditch the tax wrapper in the run-up to the election, with a spokesman telling City AM categorically “Labour has no plans to drop the British ISA.”
Designed to encourage retail investors to put money into the UK stock market and British companies, a spokesperson for the government yesterday told the FT “We are not planning to complicate the ISA landscape even further”.
Devised by former Chancellor Jeremy Hunt, the scheme would have enabled an extra £5,000 to be invested tax-free in UK equities on top of the existing £20,000 ISA allowance.
The plan sparked howls of anger from AJ Bell and its peers and news of its scrapping was cheered by its chief executive Michael Summersgill.
“The UK ISA was a political gimmick that was doomed to fail in its objective of boosting investment in UK Plc,” he said.
“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.”
AJ Bell shares rose 0.2% to 423p on the report.