- New UK ISA announced at Spring Budget will encourage savers to “Back Britain” and support UK business, helping to build a stronger economy.
- Generous £5,000 allowance is on top of existing £20,000 annual ISA subscription limit.
- British Savings Bonds, launching in April, will offer a guaranteed interest rate fixed for three years, increasing the savings opportunities available to consumers.
British savers are set for a boost off the back of the brand-new ISA and National Savings & Investments (NS&I) product the Chancellor outlined at Spring Budget.
The new ‘UK Individual Savings Account’ will give savers an extra £5,000 of tax-free investments that must be invested in UK firms – while the British Savings Bonds product will increase opportunities for people to save for the longer term, whilst encouraging retail demand for government financing. Taken together they will foster cultures of saving and investing in the UK.
The UK ISA will ensure that savers will be able to benefit from the growth of UK businesses. This is part of a number of measures the government is taking, building on Mansion House and Autumn Statement 2023 announcements, to strengthen the UK’s capital markets, boost savings, increase pension fund transparency, and facilitate investment in UK companies.
Chancellor Jeremy Hunt said: “This boost for British savers also unlocks long-term investment for Britain. We are sticking to our plan to get the economy growing, and it is right that this growth is fuelled by British innovation and enterprise in the areas where our country does it best.”
The Chancellor’s approach to create a new ISA allowance to invest in the UK will avoid disrupting people’s existing portfolios while rightly incentivising those that want to back Britain and save beyond the standard £20,000 limit.
This includes investment in those burgeoning small and medium enterprises in the high-growth sectors of the future in which Britain holds comparative advantage over its European neighbours, like digital technology – including being a clear artificial intelligence superpower in the west – and the life sciences – with the largest sector in Europe.
Meanwhile, the British Savings Bonds, a three-year savings product offered through NS&I, will go on sale in early April and will be available to consumers across the UK, with a minimum investment of £500 and maximum of £1 million. Consumers will benefit from an interest rate fixed for three years that is in line with NS&I’s requirement to balance the interests of savers, taxpayers and the broader financial services sector.
The timing will coincide with the further cuts to National Insurance for 29 million working people – putting over £900 a year back into the average worker’s pocket when combined with the cuts to Employee and Self-Employed National Insurance announced at Autumn Statement.
These represent personal tax cuts worth £20 billion, reduce the effective personal tax rate for a median earner to its lowest level since 1975, and represent the next step towards the government’s long term ambition to end the unfairness that means if you get your income for having a job you pay two types of tax, but if you get it from others sources you only pay one.
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