Spring Budget £5K UK ISA could bring new wave of clients with an interest in saving as government hopes to entice investors and higher tax-free allowance for savers

The government hopes to entice new investors with a ‘culture of investment in the country’s vibrant markets’ after the Chancellor’s Budget rollout announced the new £5,000 UK ISA. This could potentially mean a new wave of clients interested in individual saving accounts after the enticing increase in allowance was introduced.

Where the new ISA differentiates from the previous ISA -is that the new £5,000 allowance is separate from the usual annual limit. This means, potentially, that an individual’s allowance could soar to £25,000 a year if used decorously.

The new allowance, in addition to the existing ISA allowance, will provide a new tax-free savings opportunity for people to invest in the UK, while supporting British companies. This could mean support for the legal sector and a boost in clients.

Firms assisting people in putting money aside for retirement and advising them on how best to maximise their savings could see a new generation of savers tempted by a tax-free retirement pot. An influx of investment and clients could provide a healthy outlook for the legal sector.

The consultation invites views on how to design and implement the UK ISA and will run from today to 6 June 2024.

UK financial group Legal & General have commented on the Spring Budget rollout after Chancellor Jeremy Hunt announced changes to the UK ISA.

Katharine Photiou, Managing Director Workplace Savings, Legal & General Retail:

“Today’s announcement of a proposed UK ISA, with an additional £5,000 tax-free allowance for savers, is very welcome as it offers new consumer investment opportunities and opens up retail investment into UK businesses for people across the country.

“As we look to the future, it will also become increasingly important to ensure people have enough set aside to guarantee the retirement they aspire to. Overall, people are not saving enough to realise their retirement dreams, so, at some point, increasing the minimum contribution rate will need to be considered. However, it is great to see continued commitment to improving the financial adequacy of the UK public, and today’s announcement of the UK ISA contributes to that progress.”

ISAs have become popular savings products that provide an incentive for individuals to save and invest, as appropriate for their circumstances. In 2021/22 over 11 million ISAs were subscribed to. This is why, at Autumn Statement 2023, the government made changes to simplify them and provide more choice to savers, making it easier for people to choose the best ISAs for their needs and move money between
them.

The government claims the new ISA will: 

“Provide individual investors with an additional opportunity to save whilst supporting investment in the country and benefiting from its growth. Alongside this, the UK ISA will also build on the government’s Mansion House and Autumn Statement 2023 measures to reform the pensions market to unlock investment into high growth sectors and improve the competitiveness of the UK as a listing destination.”

The main objective for the new ISA changes are to support a ‘culture of investment in the UK’ and to give people the opportunity to invest and benefit from the UK’s ‘vibrant capital markets’ and ‘high-growth companies’. It will also support the wider work being done to increase the capital available for UK businesses and to support the competitiveness of UK equity capital markets.