Proactive Investors - A Labour government under Kier Starmer will push ahead with the current administration’s plans to implement a British ISA, according a report from City A.M.
Announced by Chancellor Jeremy Hunt in the Spring Budget, the British ISA will give an extra £5,000 annual tax-free ISA allowance restricted to UK-listed stocks only.
The rationale of the plan is to increase domestic investment into British equities at a time when the UK capital markets are struggling to shore up interest from home and abroad.
A source was cited as stating: “Labour has no plans to drop the British ISA. Labour wants to make it as easy as possible for people to feel the benefits of saving and investing their money, including through increased utilisation of stocks and shares ISAs.
“Labour will review the details if we form the next government after the general election. Any decisions we take will be about ensuring value for money for the taxpayer and investors.”
Hunt’s British ISA idea, which will bring the annual tax-free ISA allowance up to £25,000, has garnered mixed responses.
Though “not a silver bullet”, analysts from Peel Hunt (LON:PEEL) believe the plan could pump up to £4 billion into UK companies each year.
The Association of Investment Companies (AIC) also welcomed the announcement; however, Michael Summersgill, chief executive at AJ Bell said it is “doomed to fail in its objective of boosting UK plc”.
According to Summersgill: “Increasing investment into UK companies is a laudable aim, but this ill-conceived, politically motivated decision will simply not achieve that objective.
“50% of the money our customers currently invest through their stocks and shares ISAs is invested into UK assets, so this new allowance will have no impact whatsoever on their investment behaviour.”
Citi analysts see a £1.5 billion net inflow tailwind from the plan, while Hargreaves Lansdown (LON:HRGV) predicts the number to be just £150 million.