‘British ISA’ announced in 2024 Spring Budget – what we know so far

Chancellor Jeremy Hunt has announced a consultation on plans to launch a new ‘British ISA’. This is an ISA designed to encourage investment in UK companies.

The proposal is to give investors an extra £5,000 allowance on top of the current £20,000 ISA allowance to invest in UK shares.

Or if you want to make the most of your new 2024/25 £20,000 ISA allowance, you can already invest in UK companies and more with the HL Stocks and Shares ISA.

This article isn't personal advice. As we've seen, ISA and tax rules can change, and any benefits depend on your circumstances. If you're not sure what's right for you, ask for financial advice. Investments rise and fall in value, so you could get back less than you invest.

ISAs are a popular product which helps get people investing for the first time. It’s vital we keep this framework simple.

Following the announcement of a UK General Election, it’s likely any British ISA consultation or launch plans will be put on hold.

But we’ve 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. Our clients are already enthusiastic UK investors with 83% of shares held in UK listings.

With over 1,000 UK shares available on our platform, there’s plenty of choice. In our response to any eventual consultation, we’ll explore how best to support these investments.

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ISA changes announced in the Autumn Statement

Chancellor Jeremy Hunt announced some changes to ISAs in his autumn statement last year. They included:

Despite some calls for an increase in annual allowances, the government has frozen these limits for this tax year (6 April 2024 - 5 April 2025). This means the overall ISA allowance is still £20,000 per tax year.

You can currently split your allowance between a Stocks and Shares ISA, a Cash ISA, an Innovative Finance ISA and a Lifetime ISA (up to £4,000 per tax year which counts towards the overall £20,000 limit).

The Junior ISA allowance will stay at £9,000.

This makes it easier to have ISAs of the same type in different places in the same tax year (from April 2024). It could offer Cash ISA savers the chance to go after more competitive rates more easily, or pick and mix easy access and fixed rates.

It also helps protect those who accidentally pay into more than one of the same type of ISA in a single tax year. This is easy to do when you’re paying by Direct Debit. The change removes that risk of breaking the rules.

Our Cash ISA lets you access great rates, from multiple banks, in the same tax year.

This gives ISA savers and investors greater flexibility and control (from April 2024). The previous rules forced an all-or-nothing approach to current year ISA transfers – you had to transfer your entire ISA of that type from the current tax year, or nothing at all.

The change means you’re in charge of how much you want to transfer, no matter when you made the subscription.

ISA savers and investors were required to, in essence, reapply for ISAs they already held when there'd been a gap of one tax year where they’ve not made any subscriptions. Removing this rule should reduce the potential for confusion and cut down on unnecessary red tape.

This rule only directly impacts Cash ISAs, where the minimum age for opening an account is currently 16 years old. The 18+ rule will mirror other adult ISAs from April 2024. 16 and 17-year olds will still be able to open and save into a Junior ISA.

This allows investors who might otherwise have been priced out of certain shares to hold these fractional investments in an ISA.

The HL ISA family

With proposed changes to ISAs on the horizon, it's easy to forget there are already a range of options available to UK savers, investors and their families.

You don't need to wait to take advantage of your new annual allowances – it's easy to get started today.

With us, you can choose from a Stocks and Shares ISA, Cash ISA, Lifetime ISA, or Junior ISA for children. And you already have the flexibility to divide your ISA allowance between cash and investments.

For example, you could put £5,000 in a Cash ISA and then the remainder (£15,000) in a Stocks and Shares ISA. You could then also use the £9,000 Junior ISA allowance to help save and invest for your child’s future.