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Evening Standard
Evening Standard
World
Rachael Davies

Budget 2024: What is the new UK ISA and when will it be introduced?

Chancellor Jeremy Hunt announced as part of his 2024 budget that the Government will create a tax-free British ISA.

This is part of the Government’s efforts to encourage more investment into UK companies, among rising concerns about London’s stock market.

The move supports similarly focused plans laid out in the autumn statement in November, such as the goal of selling a portion of the Government’s remaining 32 per cent in the NatWest Group to consumers this year.

The chancellor explained in his budget speech that the Government’s savings bank, NS&I, would also launch British Savings Bonds from April. These would guarantee a fixed interest rate for UK savers for three years.

Here’s a closer look at the new UK ISA and when we might expect to see it.

What is the new British ISA?

ISA stands for individual savings account and could allow British consumers to invest up to £5,000 into UK businesses, including stock and debt.

They wouldn’t need to pay capital gains tax on any profits made from those investments.

The British ISA would add to the existing stocks and shares ISA already available to UK consumers. Currently, this ISA offers account holders the chance to invest up to £20,000 tax-free, but without any restrictions on where companies they invest in are based.

In contrast, the British ISA is focused on UK companies. However, consultation documents released on Wednesday, March 6, suggest that the new ISA could also allow tax-free investments in UK Government bonds, potentially siphoning money away that was originally intended for UK companies.

Hunt maintained the new ISA would “ensure British savers can benefit from the growth of the most promising UK businesses, as well as supporting those businesses with the capital to expand”.

When will the ISA be introduced?

With the consultation documents currently inviting views on how to design and implement the UK ISA between March 6, 2024 and June 6, 2024, there won’t be any movement on the British ISA until this is concluded.

A more concrete timeline should be available after this time.

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