What is the British ISA? Jeremy Hunt's new tax break for investing in UK assets explained

What is the British ISA? Jeremy Hunt's new tax break for investing in UK assets explained

Tax expert Simon Rothenberg explains what the British ISA is

Jessica Sheldon

By Jessica Sheldon

Published: 07/03/2024

- 15:47

The Treasury has launched a UK ISA consultation, inviting views on how to design and implement it, following Chancellor Jeremy Hunt's Spring Budget announcement

Chancellor Jeremy Hunt announced the launch of a new British ISA in yesterday's Spring Budget, in a boost for tax-free investing and saving opportunities.

The new ISA, which stands for Individual Savings Account and is a way of saving or investing tax-free, would offer an additional £5,000 tax-free allowance for investing in UK assets.

This £5,000 allowance would be provided on top of the existing £20,000 annual ISA allowance, providing a new tax-free savings opportunity for people investing in the UK.

It's currently possible to pay into one of each type of ISAs, of which there are four, each tax year, providing the annual limits - and the £4,000 cap for Lifetime ISA deposits - isn't exceeded.

Use our tax calculator to see how 2024 Spring Budget affects you

Jeremy Hunt and stocks and shares figures

Chancellor Jeremy Hunt announced the British ISA in his Spring Budget yesterday


HM Treasury has now opened a consultation, inviting views on how to design and implement the UK ISA, and will run from April 6 to June 6, 2024.

In an exclusive video for GB News, Simon Rothenberg, a partner at leading tax audit and business advisory firm Blick Rothenberg, explained: "An ISA is a tax-free wrapper that allows you to save towards either cash savings or stocks and shares.

"And on the sale of those shares, any gains, any dividends from any investments are tax-free.

"The current ISA allowance is £20,000 per year. There are Junior Isas for children as well. However, the new British ISA is an additional £5,000 allowance over and above the £20,000.

"So you could save each year £25,000 worth into stocks and shares if at least £5,000 were UK companies and the the proceeds from that would be tax-free."

Mr Rothenberg explained he believes the British ISA was designed to try and stimulate investment into UK stocks and shares.

He said: "At the moment, in a normal stocks and shares ISA, you can save into stocks and shares and any form of investment anywhere in the world.

"Within a British ISA it will only be UK and what Jeremy Hunt is trying to do, along with some of his changes to pension investment rules, is to stimulate investment within UK businesses."

Robert Salter, a partner at Blick Rothenberg, said the move to encourage investment in British shares via a British ISA was a "questionable decision".

He said: "The reality is that most advisors would suggest that a good investment strategy for savers to typically ‘spread their risk’ amongst different markets/countries and it is therefore very questionable as to whether this move will have any success.

"It should also be noted that the great majority of people who invest in ISAs aren’t actually utilising their full annual ISA allowance anyway.

"As such, providing the opportunity for people to invest a further £5,000 in the British ISA (on top of the regular £20,000 limit) is simply going to be irrelevant to most smaller savers."

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