Gimmicky British ISA tops reform to personal finances
The main attempts to ease the pressure on household budgets came from the cut to National Insurance which Jeremy Hunt claimed would be worth £900 a year on top of the last cut announced in the Autumn statement.
Top of the Chancellor’s measures to ease personal finances was the cut to National Insurance from by 2p in the pound for employees and the self-employed.
But changes to the threshold of when child benefits can be paid to households changed, rising to £60,000, a recognition of the fiscal drag into different thresholds that he otherwise ignored.
The reform of the High Income Child Benefit Charge to be assessed on a household-basis by April 2026, and immediate support for working families by increasing the threshold to £60,000 and halving the rate at which Child Benefit is repaid – claiming this represents a £1,260 boost on average for around half a million working families.
As part of a wider reform of personal savings Hunt also said he would trial a new £5,000 top up the ISA tax allowance as part of a new “British ISA” tax allowance for individual savers to invest £20,000 a year in UK-listed companies without paying tax on interest or returns.
The new ISA, which will be introduced after a consultation into the implementation, will allow investors to put an extra £5,000 into UK equities.
Hunt said: “Following calls from over 200 representatives of the city and our high growth sectors, I will reform the ISA system to encourage more people to invest in UK assets.”
This was done he said in order to “ensure that British savers can benefit from the growth of the most promising UK businesses as well as supporting them with the capital to help them expand.”
He also said he would simplify the rules around opening multiple ISAs in a single tax year.
Suzy Harris-Milnes, Tax Partner at BHP said: “The announcement of the British ISA will be well received by some as offering an opportunity to invest a further £5,000 annually and benefit from the tax-free interest. This ISA will only be invested into British businesses as part of the Chancellor’s plans to grow UK companies.”
