Most experts welcome the British ISA unveiled today, but not all are convinced it will do enough for the struggling UK equity market.
They say until stamp duty is reformed -- or preferably abolished -- UK shares will remain under water.
Under the new measures, Brits would be allowed to invest an extra £5,000 tax-free into UK equities on top of the current £20,000 annual allowance.
Nick Saunders, CEO of leading stock trading platform Webull UK, said: “The Chancellor needs to act to turn around the prospects of an increasingly moribund London Stock Exchange, which is facing an assault on two fronts. The number of listed companies is falling; despite a move back into equities UK investors are investing overseas.
“The introduction of the British ISA is bound to be taken up with enthusiasm by those who have already maxed out their £20 000 annual allowance, but will do little to encourage new investors into the market. Without a reform of stamp duty on share purchases, the UK market is uncompetitive, particularly for those with smaller portfolios. The concept of the British ISA is great, but is not innovative enough to bring substantial new money into the market.”
Susannah Streeter, head of money and markets, Hargreaves Lansdown said: ''ISAs are a popular product which helps get people investing for the first time, its vital that we keep this framework simple. We welcome the launch of the consultation which considers how to revitalise UK listings with a British ISA. We have heard the calls around improving liquidity in London markets, especially at the small and mid-cap end. Here retail investors have an important role to play. HL’s clients are already enthusiastic UK investors with 83% of shares held in UK listings.
“With over 1000 UK equities available on our platform there is plenty of choice. In our response to the consultation, we will explore how best to support these investments. Beyond this it’s clear that we need measures to encourage more people with excess cash savings to invest. Here there are other levers to pull. The review of the advice boundary allowing for more personalised support for consumers has the potential to have a significant impact. Helping the 92% who do not receive investment advice, make their first steps into investing.”
Still others think the British ISA is an opportunity missed to encourage younger savers into the stock market.
“Kevin Brown, savings specialist at Scottish Friendly, says: One missed opportunity was to broaden the scope of family ISA saving and investing across the generations. Our research has shown that 7 in 10 (68% of parents) want grandparents to be allowed to open a JISA for their grandchildren, however the current rules stipulate that it has to be the parent or the guardian that does this first.
“There needs to be a change to JISA rules to allow other family members, such as grandparents, to open them too. This would provide a boost to children's savings.”
