Interactive Investor

Budget reaction: ii comments on UK ISA, pot for life, NatWest share offer and more

ii experts address Jeremy Hunt's announcements in the Spring Budget.

6th March 2024 16:23

Camilla Esmund from interactive investor

interactive investor comments on:

  • UK ISA
  • A missed opportunity: removing stamp duty for UK shares
  • NatWest share offer
  • Pot for life
  • And child benefit

UK ISA

ISAs are a huge success story with 27 million adults in the UK now holding savings and investments in an ISA, valued at approximately £687 billion, with over 300,000 ISA clients on the interactive investor platform.  

interactive investor data (based on our customers) reveals that retail investors are already heavily invested in UK Plc. Our data shows that 80% of directly held equities across the platform are invested in UK-listed equities.

Richard Wilson, CEO at interactive investor, says: “We welcome the government’s initiatives to help broaden access to investing and address the savings gap in the UK, while boosting the UK economy. The additional tax-free allowance of £5,000 a year to invest in UK shares is a positive for investors. As ever, however, the devil will be in the detail, and we will have to see how a new ‘UK ISA’ will work in practice. The key will be keeping it straightforward for investors – we do not need additional complexity to what is an already crowded and complex ISA environment."

A MISSED OPPORTUNITY: removing the stamp duty on UK shares

Richard Wilson, CEO at interactive investor, says: “We are disappointed by the missed opportunity in today’s announcements, which could have been a win-win for both investors and the UK economy. There was no removal of stamp duty on UK shares and investment trusts, even though this lopsided tax has a dampening effect on liquidity in the marketplace, leading to lower economic growth, and driving flows to other markets and products. Removing the stamp duty barrier would be a critical step towards creating a more inviting investment landscape. We will continue to urge the government to give this the attention it deserves.”

NatWest share offer

The government has been in talks with interactive investor about selling down its stake in NatWest Group (LSE:NWG) to retail investors.

A spokesperson for interactive investor, says: “Enabling our customers to participate in the sale would align with our commitment to democratising investment opportunities for retail investors.”

Pot for Life

Alice Guy, Head of Pensions and Savings at interactive investor, says: “The new lifetime pension proposals could be a game changer for the UK pension system, but changes could take years to implement with many practical details to iron out. In the meantime, we’re stuck with a clunky system where pension savers change pension provider each time they move job and build up multiple pension pots across their working life.

“The good news is that you don’t need to wait for the lifetime pension to take control of your pension wealth. In fact, thousands of pension savers are already taking action to get interactive with their pension, consolidating their workplace and private pensions, and potentially saving thousands in pension fees in the process.”

Child Benefit 

Myron Jobson Senior Personal Finance Analyst, interactive investor, says: “There were few rabbits to emerge from the chancellor’s red box, but the plumpest of those that did involve addressing the baffling anomalies and inconsistencies in the Child Benefit regime. The tax charge is widely seen as unfair because the £50,000 threshold has not changed since 2013 and applies if just one parent earns over £50,000 but not if both parents earn just below the threshold. This is finally being looked at, with the government committing to removing this unfairness and moving to a system based on household rather than individual incomes by April 2026, and will consult on the matter. 

“The fact that the threshold for the High-Income Child Benefit Charge hasn’t risen in line with earnings since it was introduced in 2013 has been a source of contention among parents - especially giving the rise in the cost of living which has put extra pressure on household budgets. This too has been addressed, with thresholds rising to £60,000, while the rate of the charge will also be halved so that Child Benefit is not repaid in full until you earn £80,000. The tax cliff edge will become less severe for parents, who faced a higher marginal rate of tax as their income grew. The changes mean that a family with two children will now lose £1,000 for every £10,000 once they earn £70,000 and £2,000 for every £10,000 once they earn £80,000.”

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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