UK Government Unveils British Isa to Boost Investment in UK Assets

Jeremy Hunt, the Chancellor of the Exchequer, has announced the introduction of the UK Isa, a new savings scheme aimed at promoting investment in UK assets. This move comes as part of the government’s initiative to address concerns surrounding declining interest in London’s stock market.

The UK Isa, allowing consumers to invest up to £5,000 tax-free in UK businesses, including stocks and debt, is set to encourage more participation in the public markets. Hunt highlighted plans to reduce the government’s stake in NatWest Group, previously bailed out during the 2008 financial crisis, by selling a portion to new retail investors.

In addition to the British Isa, the government revealed plans for NS&I, the UK government’s savings bank, to launch British Savings Bonds with a fixed interest rate for three years, scheduled for release in early April.

The proposal for the British Isa, endorsed by representatives from the City and high-growth sectors, aims to boost competitiveness in UK stock markets and drive investment in promising UK businesses. This new savings scheme is designed to facilitate capital expansion for businesses while providing British savers with opportunities for growth.

However, concerns have been raised about the inclusion of UK government bonds in the tax-free investments under the British Isa, potentially diverting funds from UK companies. Moneybox, an investment platform, pointed out that the additional £5,000 allowance may primarily benefit wealthier investors.

Despite calls to revise the 0.5% stamp duty on direct share purchases, Hunt did not announce any changes in this budget. Lobby groups like TheCityUK and UK Finance have suggested that this tax could be inhibiting stock market investments. Instead, a consultation was initiated for a new platform, Pisces, to enable private companies to offer shares for trading without complete public listing, aiming to enhance the IPO pipeline in the UK.