As we mark the 25th anniversary of the ISA, the government is planning to expand the tax free savings offer to give more people a stake in out country’s success, says Bim Afolami
It’s a little-known fact that the majority of ISA holders earn less than £30,000 per year. Not just a tool for the wealthy, they are for anyone who wants to plan for their future and put some money away for a rainy day.
As we mark the 25th anniversary of the ISA – which since its creation has benefited over 20m adults with over £740bn saved tax free. Back then, you could only save £7,000 tax free but due to generous rises in the threshold since 2010 this have now been raised to £20,000 per person.
By providing a tax-efficient means to save, the ISA has not only encouraged responsible financial behaviour but has also served as a catalyst for economic resilience and empowerment.
That’s why we want to expand the culture of saving and investment and are taking steps to expand the offer of tax free savings by introducing a new UK ISA. Currently under consultation, this would provide an additional £5,000 tax-free allowance for people to invest in UK assets and funds to bolster domestic investment and stimulate economic growth, building on the progress we have made by sticking to our economic plan.
The UK ISA will present a unique opportunity for savers to participate in the success of UK-based companies while enjoying the benefits of tax-free returns. By incentivising investment in British enterprises, we aim to create an environment where both savers and businesses thrive.
Our intention is clear: to cultivate a broader culture of retail investment where people can directly contribute to the growth and prosperity of the UK economy. In a similar vein, the upcoming NatWest share sale, which I am leading for the government, represents a significant milestone in our efforts to increase share ownership and promote a wider culture of retail investment in businesses and markets, right here in the UK. By facilitating access to the NatWest share sale through the ISA, we are empowering savers to become shareholders in one of the UK’s leading financial institutions.
The ISA has become a cornerstone of our nation’s savings culture and is a Great British success story. With the upcoming UK ISA and the NatWest share sale, we are laying the foundations for a better future for all British savers and helping to grow the UK economy.
Bim Afolami is Economic Secretary to the Treasury