Chancellor Jeremy Hunt announced a new ‘British Isa’ in the Budget.
It provides investors a £5,000 extra tax-free allowance in order to “encourage more people to invest in UK assets.”
Hunt said the new British Savings Bond will launched in April, provided by National Savings and Investments. It will offer a guaranteed rate, fixed for three years.
Katharine Photiou, managing director workplace savings, Legal & General Retail, said: “Today’s announcement of a proposed UK ISA, with an additional £5,000 tax-free allowance for savers, is very welcome as it offers new consumer investment opportunities and opens up retail investment into UK businesses for people across the country.
“As we look to the future, it will also become increasingly important to ensure people have enough set aside to guarantee the retirement they aspire to. Overall, people are not saving enough to realise their retirement dreams, so, at some point, increasing the minimum contribution rate will need to be considered.
“However, it is great to see continued commitment to improving the financial adequacy of the UK public, and today’s announcement of the UK ISA contributes to that progress.”
However, the Personal Investment Management & Financial Advice Association (PIMFA) has raised concerns that there will be little appetite for yet another ISA.
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 said 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.”